Congress Help Urged To Avert CU Meltdown

Credit Union Journal | Friday, March 20, 2009

WASHINGTON – Banking and credit union leaders implored lawmakers yesterday to give regulators vast new financial resources to help stabilize the nation’s depository system.

Representatives from NCUA and the credit union industry asked the Senate Banking Committee for access to billions of dollars in new resources for both the National CU Share Insurance Fund and the industry itself, and even to lean on the Financial Accounting Standards Board to ease mark-to-market accounting rules.

David Wright, president of Services CU, predicted 70% of all credit unions will fall into the red this year as a result of the $5 billion assessment for the corporate bailout and even force healthy credit unions to increase fees, raise loan rates, cut dividends and even reduce lending, at a time when consumers all around the country are in need of additional sources of funds.

The CEO of the $35 million South Dakota credit union, who was appearing on behalf of NAFCU, said as many as 210 credit unions will be pushed below NCUA’s minimum capital limits, requiring supervisory agreements.