House, Senate pass corporate stabilization bill

WASHINGTON (5/20/09)—The House and Senate on May 19 approved S. 896, the Helping Families Save Their Homes Act, which would extend $250,000 share and deposit insurance coverage and help credit unions manage the impact of the financial crisis on the credit union system through a corporate stabilization program.

The bill, which passed the House yesterday afternoon on a 367-54 vote, would extend the $250,000 federal share and deposit insurance ceiling until 2013. This ceiling is set to expire at the end of the current year.

Just hours after the House vote, the Senate approved the bill by unanimous consent. The bill now goes to the President, who is expected to sign it before the end of the month.

Under S. 896, the National Credit Union Administration's (NCUA) borrowing authority would also be extended to $6 billion, with a possible further extension to $30 billion under exigent circumstances, under the provisions of the bill.

The legislation, as passed, would also permit credit unions to spread the cost of National Credit Union Share Insurance Fund (NCUSIF) replenishment over a longer time period.

Credit unions would be given eight years to deal with the cost of a premium assessment that has resulted from losses at wholesale corporate credit unions. Credit unions also would be allowed to book any impairments related to the NCUSIF replenishment over a seven-year period.

The NCUA's corporate credit union stabilization plan will be discussed today in a hearing before the House Financial Services subcommittee on financial institutions and consumer credit, with Service 1st FCU President/CEO Bill Lavage speaking on behalf of the Credit Union National Association. NCUA Chairman Michael Fryzel will also represent the regulator in a separate panel during the hearing.

Credit Union National Association President/CEO Dan Mica in a statement yesterday had urged the Senate to approve S. 896 quickly. "This important legislation will help credit unions continue to help their members weather the financial crisis and maintain member confidence in credit unions," Mica said.

After the House vote, NCUA's Fryzel issued a statement, which said, "Congress has acted quickly and appropriately in helping NCUA and the credit union industry deal with the corporate situation through the Corporate Stabilization Program." He added that he hoped the bill would quickly be enacted into law.

courtesy of cuna.org