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Rep. Baca offers plan for CUs under TARP
WASHINGTON (1/14/09)—Rep. Joe Baca (D-Calif.) offered an amendment to Troubled Asset Relief Program (TARP) legislation that would provide a limited form of alternative capital to help credit unions participate in government assistance programs. Baca offered his amendment Tuesday during a House Financial Services Committee hearing titled, "Priorities for the Next Administration: Use of TARP Funds under EESA (Emergency Economic Stabilization Act).” The hearing also focused on H.R. 384, a newly introduced bill intended to modify rules governing TARP. A member of the financial services committee, Baca questioned the fact that credit unions have not received any of the U.S. Treasury’s TARP funds even though they are included in statutory language as eligible institutions. The California CU League met with Baca on this and other credit union issues just last week. The Credit Union National Association (CUNA) Tuesday also kept the heat on for credit union inclusion in any new program developed by Treasury under TARP. In a letter to the top members of the House Financial Service, CUNA urged that as Congress considers the conditions under which the administration may use a second installment of TARP funds, lawmakers should ensure credit unions are included in any additional programs developed for mutual institutions. CUNA President/CEO Dan Mica noted in the letter that, to date, Treasury has focused its TARP efforts on capital injections. “As a result, credit unions, including corporate credit unions, that may need access to TARP funds are shut out because the Federal Credit Union Act does not generally permit credit unions to obtain capital from outside sources,” wrote Mica. The CUNA leader recommended that Congress consider a statutory change to the definition of net worth to allow credit unions to access TARP funds. The CUNA letter also sought statutory systemic risk authority for the National Credit Union Administration Board (NCUA), on a similar basis to that which the Federal Deposit Insurance Corporation enjoys. “Without a specific systemic risk provision, NCUA has been reluctant to take this action. We believe that given the uncertainty of the economic crisis, parallel authority for NCUA to address systematic risk issues in a timely fashion is reasonable.” Mica wrote. He noted that CUNA recognizes that the challenges that our economy is facing are extraordinary, and that credit unions, as an industry, remain relatively healthy. “While there is rightly a tendency to deal with the largest problems first, the legislative changes described herein would provide avenues to assistance for which Congress intended credit unions to be eligible, and which some credit unions may need in the near future,” Mica urged. The letter was addressed to House Financial Services Committee Chairman Barney Frank (D-Mass.) and the panel’s ranking member, Rep. Spencer Bachus (R-Ala.).


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