The House today approved a bill that includes a temporary stabilization fund for corporate credit unions.
The bill, which deals with a range of issues on financial services and housing issues, passed 367-54, with one member voting present. Because the House measure is slightly different than the one passed by the Senate earlier this month, the Senate has to vote again, which will probably take place later this week.
The fund, to be financed by a line of credit from the Treasury Department, would pay back the Treasury Department over seven years. Natural person credit unions would pay the additional premium to the NCUSIF over that time period.
The NCUA has estimated that shoring up the corporates could cost credit unions an assessment of between eight and 20 basis points a year-with an average of 14basis points-over seven years.
The funds are necessary because of the costs incurred to stabilize the corporate credit unions, including injecting $1.1 billion in U.S. Central Federal Credit Union, placing U.S. Central and Western Corporate Federal Credit Union into conservatorship, and guaranteeing the deposits of natural person credit unions in the corporates.
The measure gives the NCUA $6 billion in borrowing authority (up from the current level of $100 million) and $30 billion in emergency borrowing authority. The bill gave the NCUA eight years to replenish the NCUSIF if its equity ratio falls below 1.2%. It also extends insurance coverage of accounts up to $250,000 through 2013.
The health of corporate credit unions will also be on the agenda on Wednesday, when the House Financial Services Committee's Subcommittee on Financial Institutions holds a hearing that will include testimony from regulators and credit unions.
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