Economic Rescue Legislation

Updated September, 2009

Financial EESA/TARP (Emergency Economic Stabilization Act/Troubled Assets Relief Program)

With the economic situation worsening, the Treasury Department came to Congress in September of 2008 to request unprecedented authority to help the financial services sector. The legislation that emerged from this request, the Emergency Economic Stabilization Act (EESA), gave the Treasury broad powers to help the financial services industry. This included the creation of the Troubled Assets Relief Program (TARP), with funding up to $700 Billion that would, among other things, allow Treasury to establish a program to purchase troubled mortgage assets. Credit unions were not explicitly included in the initial drafts of this legislation, but NAFCU led efforts to get credit unions included in the TARP program as part of the EESA so that they would not be disadvantaged vis-à-vis other types of financial institutions. NAFCU believes that it is important that credit unions have the same opportunity to be part of TARP programs as other financial institutions if they need it.

In the 111th Congress, House Financial Services Committee Chairman Barney Frank introduced H.R. 384, the TARP Reform and Accountability Act, to set parameters for Treasury’s use of TARP funds. NAFCU again sought parity of access for credit unions, and was successful in its efforts to include credit unions in the Capital Purchase Program (CPP) in the manager’s amendment to the bill. The amendment revised the statutory definition of net worth to ensure any credit union would qualify for TARP funds. H.R. 384 passed the House on January 21, 2009, by a vote of 260 to 166. Prospects for further action on this legislation in the Senate remain slim, but NAFCU lobbyists will continue to watch the situation.