View Full Version : Regulators preparing rescue of credit unions: report

12-09-2008, 07:31 AM
Tue Dec 9, 2008 4:18am EST

(Reuters) - Federal regulators are preparing a rescue plan to shore up the finances of some large credit unions, using billions of dollars in new government borrowings, the Wall Street Journal reported.

The plan is not a taxpayer-funded bailout, but a short-term "mechanism to stabilize the credit-union system" while regulators work on other steps, to be announced early in 2009, Michael Fryzel, chairman of the National Credit Union Administration (NCUA) told the paper.

A related program also to be announced by NCUA will provide as much as $2 billion in inexpensive loans to credit unions, which the institutions can use to reduce mortgage interest rates for homeowners, the paper said.

Fryzel told the paper he does not know how much new federal borrowing the two programs would entail. Funding for the loan programs will come through the Treasury Department.

NCUA and the Treasury Department could not be immediately reached for comment.

Credit unions are non-profit cooperatives owned by their depositors, or members. Credit unions are as a rule much smaller than commercial banks, with average assets of $93 million in the United States in 2007 according to the Credit Union National Association (CUNA), compared to $1.53 billion for banks.

According to CUNA, there are more than 8,000 credit unions in the country.

(Reporting by Pratish Narayanan in Bangalore; Editing by Rupert Winchester)

12-09-2008, 11:47 AM
So far they seem to be doing better than banks but...will all the layoffs hurt them?