Thursday, October 2, 2008

Senate passes rescue with deposit insurance boost

WASHINGTON (10/2/08)—The U.S. Senate voted 74-25 last night to approve a multi-billion dollar financial rescue package that included a temporary increase in federal share and deposit insurance coverage.

The $700-billion rescue plan is expected to be taken up by the U.S. House Friday and, if passed, quickly sent to the President's desk for his signature transforming the bill to public law.

Under the deposit insurance provisions, the current $100,000 limit on share and deposit accounts would be raised for one year to $250,000.

The Credit Union National Association (CUNA) supported that increase and sent letters to President George W. Bush, Treasury Secretary Henry Paulson and members of Congress Monday urging them to make sure to include credit unions in any plans for increased deposit insurance coverage.

CUNA President/CEO Dan Mica said of the Senate's vote, "It is important to America's credit unions that they have parity with banks in any increase in federal deposit insurance coverage. We are pleased to see this goal achieved in the Senate's financial rescue legislation."

Mica added that another CUNA goal has been to ensure credit unions have access, if needed, to the legislation's relief measures for troubled assets.

"By providing this access, the Senate legislation is careful not to place credit unions at a disadvantage. CUNA will continue to press for similar treatment in the House as it resumes its consideration of this legislation," Mica said.

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.

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