Fryzel presses on CUs’ TARP participation

Nov. 14, 2008 – NCUA Chairman Michael Fryzel, a member of the group of federal regulators that advises Treasury on implementation of the Troubled Assets Relief Program, objected to Treasury’s recent change in policy on the disposition of TARP funds.

Fryzel wrote Treasury Secretary Henry Paulson yesterday to urge that Treasury reconsider and immediately make a portion of the TARP funds available for the purchase of troubled assets from credit unions and other institutions, even if only a few require that option.

“If recent history is a guide, year-end financial statements could show all types of depository institutions, including credit unions, with losses that will underscore the continuing deterioration in the credit markets,” he wrote. “Furthermore, these developments would severely undermine the confidence of the citizens of this country at a time when the federal government is expected to be undertaking firm and coherent steps to improve the situation.”

Fryzel asked that Treasury staff expedite a process for credit unions to participate in TARP so he can inform them of their options by month’s end. “If mitigating steps are not made available through TARP before year-end, some credit unions experiencing difficulties could face a considerably worsened financial environment and would require more costly remedial action.”

Paulson, Federal Reserve Board Chairman Ben Bernanke and members of Congress have all stated publicly that they know credit unions are not at the root of the current crisis and that they deserve the opportunity to participate in TARP.