ALEXANDRIA, Va. – National Credit Union Administration Chairman Debbie Matz told the House Financial Services Committee Tuesday morning that her agency and the Financial Stability Oversight Council (FSOC) have a "mutually beneficial" relationship that helps NCUA better protect credit unions and their members.
The FSOC, which was established under the Dodd-Frank Act, provides monitoring of the stability of the nation's financial system. Matz is one of the 10 voting members of the council.
"The [FSOC] is performing a valuable service for the American people by identifying risks, promoting market discipline and responding to emerging threats to the U.S. financial system on critical issues such as the oversight of key financial market utilities, data standards infrastructure and cyber-security threats," Matz told lawmakers at the hearing.
Matz also said the FSOC provides regulators with a valuable forum for sharing best practices and coordinating regulation of the nation's financial system that helps safeguard the country's economic stability.
"The 2008-2009 financial crisis demonstrated why the complex, evolving financial system needed broader oversight," Matz said. "I find NCUA's inclusion on FSOC to be mutually beneficial. Participation in FSOC has expanded our perspective. As a result, NCUA is better able to fulfill its mission of providing, through regulation and supervision, a safe and sound credit union system which promotes confidence in the national system of cooperative credit. In return, the [FSOC] benefits from NCUA's supervisory expertise and extensive analytic resources."
Matz noted that when she took over the CU regulator, five corporate credit unions were on the brink of failure. "These failures could have led to the collapse of the credit union system," she said. "To prevent this, NCUA developed a mechanism to securitize more than $40 billion in toxic assets once held by the failed corporate credit unions."
She added that the NCUA's FSOC membership has helped the agency understand the broader context for emerging risks to credit unions and improved access to critical financial and market information and the other member agencies benefit from NCUA's perspectives in discussions of systemic risk.
