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NEW Deposit insurance increase just one step away
WASHINGTON (10/3/08, Updated 1:30 p.m. ET )—The House passed the Senate-approved economic rescue package 263-171 Friday afternoon and now the legislation, which carries a temporary hike in deposit insurance coverage, just needs the signature of the President to become law. Credit unions have been questioning at what point can they refer to the new $250,000 insurance ceiling as they work to reassure members of the safety of their shares accounts. CUNA’s Ryan Donovan said, “It is possible the President may sign the bill today, but maybe not until tomorrow or Sunday.” Donovan is vice president of legislative affairs. The overall rescue bill—intended to shore up the nation's economy in light of such factors as the current mortgage crisis and wildly fluctuating activity on Wall Street—would allocate up to $700 billion to the U.S. Treasury Department to buy up mortgage-backed securities whose values have dropped or become hard to sell. The package gives the government an ownership share in the companies that participate in the program, an element that was missing from earlier rescue drafts. This provision makes it so taxpayers could benefit from any increased value in the securities created by the government's support. After the House vote, CUNA President/CEO Dan Mica said, "Credit unions had no hand in creating the root cause of the problem this bill aims to fix. Without question, however, they and their members like so many others are collateral damage of the economic hardship that has resulted. "In that sense, Congress had to act to avert any additional damage to the nation’s economy and inject confidence in our financial system. Along those lines, credit unions appreciate the fact that the bill reflects our priority of raising the level of federal deposit insurance at credit unions (through National Credit Union Share Insurance (NCUSIF) coverage) to $250,000, giving credit unions parity with the same increase for banks and the FDIC. "This action sends a vital message to credit union members and consumers that their federally-insured deposits in credit unions remain safe."


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