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Matz Aggressive actions saved CUs from 1.5B loss
WASHINGTON (3/1/11)--Though some of the National Credit Union Administration’s (NCUA) recent regulatory actions did not help the agency win "any popularity contests" with credit unions, NCUA Chairman Debbie Matz has said that those actions saved the credit union system from $1.5 billion in total losses.
Click to view larger image NCUA Chairman Debbie Matz told credit union representatives at CUNA's GAC that while some recent regulatory actions may not have won the agency "any popularity contests" among credit unions, failing to act would have meant dozens of high-profile failures. (CUNA Photo)
Matz made her remarks before the Credit Union National Association’s 2011 Governmental Affairs Conference Monday, and she was followed on the program by fellow board member Michael Fryzel. NCUA board member Gigi Hyland is scheduled to speak at the GAC on Wednesday morning. Matz cited the NCUA’s decision to increase administrative actions on some troubled credit unions and to ramp up its examination frequency from once every 18 months to once a year as the type of “tough love” that helped the credit union system continue to move forward in troubled economic times. The agency also "used very prescriptive Letters of Understanding and Agreement to commit certain credit unions to specific performance targets with very close supervision" and worked to find merger partners for troubled credit unions “that simply could not survive on their own," Matz added. The NCUA also worked to find new leadership for troubled credit unions and temporarily conserved some credit unions to help stabilize them in tough times, she said. This type of aggressive regulation reduced the total number of 2010 natural person credit union failures to 28 and dropped the total amount of related losses to $221 million, Matz said. These losses were five times lower than the losses incurred by the banking industry during that same period, Matz added. “For most credit unions, there is no need to fear a tough regulator. In fact, a tough regulator can protect you,” she said. Matz also made the case for continued strong regulation going forward and said that she would rather the NCUA “be tough today” than “fail to prevent catastrophe tomorrow.” Legislators should also do their part to ensure the continued health of the credit union system by allowing credit unions to raise supplemental capital and by lifting the current 12.25% of assets cap on credit union member business lending, Matz said. Matz’s NCUA colleague Michael Fryzel emphasized the importance of direct contact with legislators in remarks delivered later in the day. Fryzel said that members of Congress must constantly be reminded of all the good things that credit unions do, and that credit unions are the financial services provider for 90 million Americans. The face-to-face contact that credit union representatives make with their legislators during this year's GAC will be felt by the credit union system for years to come, Fryzel added. Overall, credit unions now should focus on putting in the work needed to keep the credit union movement going for the next generation and concentrate on growth, learn lessons, and "make acts, large and small, every day, to move forward," Fryzel said. "If we continue to think of ourselves as a cooperative movement, as a selfless effort for the benefit of members, people will use us in even greater numbers, and our problems will fade as we grow," he added.


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