Frank: CUs will feel like brother of "prodigal son"

WASHINGTON (2/26/09)—Credit unions will likely feel like the brother of a "prodigal son" this year as Congress works to clean up the subprime mortgage mess, Rep. Barney Frank (D-Mass.) told attendees of the Credit Union National Association's (CUNA) Governmental Affairs Conference Wednesday.

Frank, chairman of the House Financial Services Committee, continually complimented credit unions for helping Americans, especially low-income Americans, access affordable financial services. But although credit unions "in no way contributed" to the subprime mortgage meltdown, they will likely feel the effects of it.

Such as in the story of the prodigal son, "well-behaved" credit unions will continue their responsible financial activities as other institutions that "behaved badly" and triggered the credit crisis receive help.

"You're the good son," Frank said. But, "you are the victim of other's mistakes. You've been damaged."

As the "good son," credit unions will not experience a change in tax status. And because credit unions did not contribute to the current financial crisis, there is no reason to impose additional restrictions on them, Frank said.

"If credit unions made all of the mortgage loans, then there would have been no subprime crisis and therefore no economic crisis," he said.

Frank also briefed attendees on the way Congress will have to handle the financial crisis—by first dealing with the crisis, and then finding ways to prevent it from happening again.

Congress' high priority is getting the credit system functioning again. Frank assured credit unions that Congress would work with them to minimize any damage they are experiencing because of others' mistakes.

It's important to remind legislators that credit unions play a significant role in legitimate community-oriented financial activities, he said.

courtesy of cuna.org