January 27, 2009

The Honorable Timothy F. Geithner

Secretary of the Treasury

U.S. Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, DC 20220

Dear Secretary Geithner:

Congratulations on being sworn in as the 75^th^ Secretary of the U.S.
Department of the Treasury. Please be assured that as Chairman of the
National Credit Union Administration (NCUA) I share your dedication to
the preservation of a strong and viable financial services sector and
stand ready to assist you in any way possible toward achieving this
goal.

Knowing of your commitment, and that of President Obama, to reforming
the Troubled Assets Relief Program (TARP), I request that you take a
fresh look at two of the issues of the greatest concern to me as the
Federal regulator with responsibility for the safety and soundness of
the credit union system.

Last November I wrote to former Secretary Paulson to express my
disappointment at his decision not to use funds authorized by Congress
to purchase illiquid assets. This provision of the Emergency Economic
Stabilization Act had been welcomed by credit unions as one possible
mechanism by which many of them might gain relief under the TARP
program.

Similarly, guidelines have yet to be established for the participation
of member-owned cooperative institutions in the Capital Purchase
Program, forestalling another possible option for credit unions in need
of assistance as the nation's economic downturn persists.

While I appreciate the actions that the Treasury Department has taken to
help large banks and other major financial institutions which have
faltered or failed, I am deeply concerned about the second-place status
into which credit unions and other smaller financial institutions seem
to have been placed.

While credit unions thus far largely have avoided the high-profile
failures seen in other sectors, I can assure you that the system is not
immune from the stresses resulting from the deepening credit crisis.
Indeed, they are real and tangible, and NCUA has taken and will continue
to take proactive steps in the face of growing economic adversity.

In addition to the opportunity for TARP participation on the part of
credit unions, the second issue I wish to draw to your attention is
another matter which went unaddressed by the previous Administration.
Last October, I wrote to Secretary Paulson requesting the assistance of
the Department in establishing a program parallel to the one allowing
the FDIC to temporarily guarantee deposits in non-interest-bearing
transaction accounts at FDIC-insured institutions without limit.

The equivalent accounts at credit unions are known as business share
draft accounts. Lacking in the Federal Credit Union Act (FCUA) the
systemic risk authority which resides in the Federal Deposit Insurance
Act (FDIA), the NCUA is without explicit statutory authority to provide
such coverage on a system-wide basis. While the preferred solution to
this disparity is to grant systemic risk authority to the NCUA -- a
matter which we are pursuing -- it is not realistic to expect Congress
to address this issue legislatively in the very near term.

Based on the belief that the policies of the National Credit Union Share
Insurance Fund (NCUSIF) should be generally consistent with those of the
FDIC, I believe it is imperative that there be full share insurance
coverage for non-interest-bearing business share draft accounts through
2009. I request that the Treasury Department work with the NCUA to
establish a parallel guarantee in order to avoid any unintended impact
on the credit union system.

Thank you very much for your attention to these issues. I am keenly
aware of the monumental challenges facing the Department, and I again
offer the NCUA as a resource in the effort to put America's financial
system back on sound footing. In addition to the specific issues
mentioned above, I ask you to bear in mind the key role played by credit
unions and credit union members in our financial system as you
reevaluate the Federal response to the ongoing economic crisis.

Sincerely,

Michael E. Fryzel

Chairman