ALEXANDRIA, Va. – Credit union representatives, not NCUA, will decide the number of corporate credit unions that will survive the expected consolidation of the corporate system, according to NCUA.
"Consolidation is not something NCUA can mandate. It will be based in what credit unions want to do," said NCUA Board ember Michael Fryzel, in an interview Friday with The Credit Union Journal. "NCUA will not mandate. NCUA cannot mandate the number of corporates."
Fryzel was alluding to an emerging consensus among credit unions that the current corporate system comprised of 27 corporates and U.S. Central should be consolidated into a handful of institutions. A growing consensus is calling for the elimination of U.S. Central FCU, which has reporting massive losses.
Fryzel, who chaired the NCUA Board until this month’s appointment of Deborah Matz, said his year chairing the three-member NCUA Board will be remembered for "perhaps the most difficult time credit unions have been through" and his efforts to stabilize the corporate system. He said he hopes that those efforts, that resulted in massive amounts of liquidity being made available for U.S. Central and WesCorp FCU, and the creation of a Corporate CU Stabilization Fund, will buy time while the credit union movement develops a plan to reform the corporate system.
Among the reforms he expects NCUA to enact regulatorily are limits on investments, concentration of assets and minimum capital. "We want to put in place rules to ensure that this never happens again," said Fryzel.
NCUA officials expect to issue a proposal for public comment on corporate reform by year-end and a final rule sometime next spring.
