WASHINGTON – New NCUA Chairman Michael Fryzel is calling on Congress to ensure a credit union role in the massive bailout of the mortgage markets that is moving swiftly to a vote.
Fryzel – on the job just six weeks – on Friday told key lawmakers the historic financial crisis has frozen credit availability and pushed up the costs of borrowing for credit unions, just as it has for banks and investment firms, in arguing for a place in the bailout.
“While the NCUA has pursued aggressive regulatory and supervisory controls, and credit unions generally avoided the weak underwriting practices which contributed to the subprime crisis, the credit union industry is not immune from the effects of the prevalence of illiquid mortgage-related assets in the system, said Fryzel, in a letter to congressional leaders. “Those with concentrations of mortgage-related securities are finding it increasingly difficult to meet their members’ liquidity needs.”
The credit union system, said Fryzel, “has seen liquidity capacity contract and the cost of borrowing increase sharply in recent weeks, with no indication that the trend will abate.”
He urged that the bill being negotiated allow all financial institutions regardless of charter type, including credit unions, to participate in the program.
The letter was delivered to the leaders of the House Financial Services Committee and Senate Banking Committee, as well as House Speaker Nancy Pelosi and other leaders involved in the negotiations.
