Fryzel to Senate: Preserve Independence of NCUA and NCUSIF
Says Other Regulatory Improvements Warranted
March 19, 2009, Alexandria, Va. – The National Credit Union Administration (NCUA) Chairman Michael E. Fryzel today underscored the public policy benefits of a distinct federal credit union regulatory and insurance entity in testimony before the Senate Banking Committee while calling for an improved federal regulatory standard setting authority.
“Credit unions are fundamentally different in structure and operation than other types of financial institutions…Our strong belief is that these unique and distinct institutions require unique and distinct regulation,” stated Chairman Fryzel.
In his statement to the Senate Banking Committee, Chairman Fryzel also discussed the overall strength of the credit union industry and the statutory and regulatory differences that have provided consumers with a viable cooperative alternative in the financial services marketplace. Fryzel also underscored the solid performance of the National Credit Union Share Insurance Fund (NCUSIF), noting that “even in the face of significant stress in the corporate credit union part of the system, the Fund has proven durable.”
Fryzel went on to describe the prudential benefits of an integrated credit union regulatory/insurance function at the federal level, commenting that “this consolidated approach has enabled NCUA to manage risk in an efficient manner and identify problems in a way that minimizes losses to the Fund…(It) has had significant public policy benefits, and is worth preserving.”
Saying “there is a better way forward,” Fryzel also suggested a federal oversight entity, charged with establishing general safety and soundness standards, issuing principles-based guidance and monitoring systemic risk. Under this proposal NCUA and other regulators would still be responsible for enforcement, and an independent NCUA and NCUSIF would be in place to preserve the credit union regulatory structure “that has been tested and proven to work for almost 40 years.”
Chairman Fryzel’s testimony is available online at http://www.ncua.gov/news/speeches/Testimony.htm.
The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the savings of nearly 89 million members in all federal credit unions and the vast majority of state-chartered credit unions. NCUA is supported by credit unions, not federal tax dollars.
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