WASHINGTON - New NCUA Chairman Michael Fryzel promised last week to monitor credit unions closely during the ongoing financial crisis, that is pushing many institutions, including credit unions, to the brink.
"Now is not the time for a 'business as usual,' passive approach...Where I see a balance sheet problem, I will move decisively to resolve it. Where I see adverse trends, I will take steps to correct them," Fryzel told about 350 attendees to NAFCU's annual Congressional Caucus, as financial markets were collapsing.
Fryzel also called on the industry to step forward and assist in dealing with the market turbulence that is affecting the entire financial services industry. "I expect every trade organization, every volunteer and every credit union professional to render their full support to our efforts to keep the entire credit union system vibrant and stable," he stated.
"And where activities carry unacceptably high levels of risk and expose consumers to potential loss, I will intervene decisively," he said.
Fryzel unveiled what he called a comprehensive stress test of the National CU Share Insurance Fund, aimed at determining the Fund's "capacity to withstand the stresses that could develop as a result of the credit and mortgage dislocations."
The share insurance fund has come under increasing stress as it makes payouts to depositors of failed credit unions and finances work-outs for several troubled institutions.
NCUA reported that losses for the fund continued to grow in July, as the credit union deposit insurance fund reported its biggest single month loss ever of more than $225 million.
The July losses include more than $200 million accrued for two of the biggest credit union failure ever, of Cal State 9 CU, a one-time $460-million credit union in Concord, Calif., and Sterlent CU, a one-time $150-million credit union nearby in Pleasanton, Calif. The remnants of the two California failures were purchased by San Francisco-based Patelco CU, while NCUA assumed the failed assets, mostly real estate loans.
"My goals are clear and my mission strong," said Fryzel, "My willingness to work alongside credit unions is part of my regulatory duty and philosophy. I pledge to you a strong and sensible approach to the regulation of credit unions." (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com/ http://www.sourcemedia.com/
