by Ron Daly
[Editor's Note -- Our popular Townhall Meeting page is still available for you to vent frustrations/ask questions/post links regarding HARP, SIP, CLF or any other CU related bailout topic. To visit the Townhall Meeting page, click the "Townhall Meeting" button here:
Or on the left-hand column. Now, back to SIP.]
When TIME magazine was making the case in November for "Person of the Year", I paused when they suggested Ben Bernanke. I read about what might make the case for him to get the nod:
"By studying the lessons of the Great Depression — don't let the banks fail — he might have prevented another one." - from Time.com's POTY candidate evaluator.
I'm not sure I've always been a big fan of Ben Bernanke. Or the Fed in general. But if this is, in fact, the reason Bernanke has done what he has done and has tried to push help toward large investment banks, then I suppose there's some merit to the idea of making him "Person of the Year". Although, frankly, we all know who that'll probably be (Hint: It starts with a "B" and ends with an "arack Obama").
So, with that in mind, we turn our eyes to
SIP, or the CU System Investment Program. With this,the NCUA corporate credit unions that are racking up billions in unrealized losses (
read this CU Journal article) can stem the downturn long enough to make it to a recovery cycle.
This article, also from CU Journal, tries to simplify the SIP situation (
click here to read). One excerpt, in particular, that has impact:
"NCUA's Fryzel said the CLF plan is not expected to solve the corporates' problems, but to buy them time while they bleed off some of the securities they hope to hold to maturity and while the markets recover, helping them to recoup some of the market value on their holdings. 'We've got to do whatever we can right now,' he said." - from "NCUA unveils 'SIP' As Means of Helping Corporates", CUJournal.com
And sure, there are plenty of people out there who worry about what affect this and other bailout programs have on natural person credit unions. And they should. Natural Person CUs (NPs) will be able to qualify for CLF loans that can do what TARP was supposed to do from the beginning - help people drowning in their mortgages. Will the NPs be tied to corporate's liquidity/security? Of course. And some will have to suffer losses. The question now isn't "what happened?", it's "who benefits?"
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