Matz tells Senate Banking Committee that the NCUA took decisive action
12/09/2010 10:02 am
NCUA Chairman Debbie Matz testified before the Senate Committee on Banking, Housing, and Urban Affairs. The meeting was called so Senators could be given the "state of the credit union industry." Matz told Senators that the NCUA has reformed and strengthened the corporate credit union system and enabled credit unions to continue serving consumers despite difficult economic times.
“NCUA’s increased supervision has contributed significantly to the credit union system’s ability to withstand the extraordinary economic shocks over the past two years,” stated Chairman Matz. “Our experience demonstrates the value of rigorous regulation, diligent oversight, and a healthy insurance fund. Equity in the National Credit Union Share Insurance Fund is now up to 1.29 percent, near the high end of its normal operating range.”
Matz also talked about how the downturn in the housing market seriously affected corporate credit union investments, destabilized the corporate credit union sector and threatened the financial stability of the entire credit union system.
“From the onset of this crisis, NCUA took decisive action to stabilize, resolve and reform the corporate system.”
Matz specifically identified the 2009 creation of the Temporary Corporate Credit Union Stabilization Fund as instrumental in allowing the credit union industry to pay for corporate credit union losses in a manageable fashion over a 10-year period.
“Let me emphasize this point: These losses are being paid for entirely by credit unions,” noted Matz.
The NCUA's actions during the fall of 2010 were also a focal point of the testimony. Matz outlined NCUA’s conservatorship and resolution of five failing corporate credit unions, the subsequent securitization of impaired securities held by those corporates, and the creation of “bridge” corporates that ensured uninterrupted service to the industry. Matz gave details of the corporate reforms approved by NCUA in September that will ensure a stronger and more durable system. Citing a need for enhancements to the Federal Credit Union Act that will improve the operations of the NCUSIF, Matz asked the Senate to quickly approve a package of technical amendments currently pending.
“With this legislation, America’s credit unions would be even better positioned to help consumers take advantage of opportunities that a recovering economy will offer.”
Sen. Jack Reed (D-RI) asked Matz about member business lending and if she was aware their was legislation to raise the cap. Matz said she supports the legislation. When asked again about member business lending by Sen. Mike Johanns (R-NE), Matz said that if credit unions manage their lending well and the NCUA provides oversight, that credit union business lending is a valuable service to small businesses. Sen. Johanns said he meets with small businesses all the time and they say they cannot get credit and that it's needed to help the recovery.