Magazine article American Banker

Congress Endorses Plan That Would Strengthen Credit Unions, Cut Budget

Magazine article American Banker

Congress Endorses Plan That Would Strengthen Credit Unions, Cut Budget

Article excerpt

WASHINGTON -- A deposit plan that would strengthen the credit union insurance fund was given initial approval by Congress last week. But the impetus for the endorsement appears to be an accounting side-effect which would reduce the budget deficit by $850 million.

The plan, which calls on federally insured credit unions to place 1% of their insured savings in the National Credit Union Share Insurance Fund, was designed by the National Credit Union Administration as part of its program to bring the fund to the equity ratio levels of similar funds for banks, savings and loans, and savings banks.

Senate Banking Committee Chairman Jake Garn, R-Utah, introduced legislation last November after the Office of Management and Budget discovered that because money put in the insurance fund legally had to be invested in government securities, the plan would reduce the deficit, on paper, by $850 million -- the amount of additional capitalization -- sources said.

However, the plan still faces some problems because opposition to unrelated items in the Omnibus Budget Reduction Act -- the bill in which the deposit plan would be included -- could cause the rejection of the capitalization.

A spokesman for the National Credit Union Association said the group hoped the act would be passed before the upcoming congressional recess.

Because the National Credit Union Share Insurance Fund was never capitalized like other insurance funds, its ratio of equity to insured savings is only 0. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.