CUs Get Pushed Out From Under The TARP

Credit Union Journal | Monday, November 17, 2008

WASHINGTON – The credit union lobby was working last week to develop some kind of assistance package geared towards credit unions, after the Treasury Department effectively edged them out of its bailout plans under the Troubled Asset Relief Program, or TARP.

But a consensus was illusive, with CUNA targeting the National CU Share Insurance Fund as the vehicle for funneling assistance to credit unions, and NAFCU insisted the NCUSIF not be used because of the potential to risk the health of the credit union deposit fund.

Both groups were lobbying Congress last week to get the Treasury to reverse course, after Treasury Secretary Henry Paulson announced the $700 billion bailout approved by Congress last month will not be used to buy distressed mortgage assets, but to infuse banks and other financial interests with new capital. Because credit unions have been unable to gain clearance for the cash infusions, this effectively leaves them out in the cold.