NCUA Town Hall: Agency Says Credit Unions Need to Stay on Message (Misc News: October 15, 2010)
Third of three parts
One of the board members of the NCUA said that media characterizations of the agency’s plan to fix the corporate credit union system as a bailout are false.
“This is a not a bailout,” said Michael Fryzel at a town hall meeting to help local credit union leaders understand the agency’s response to the crisis. “There’s no question about that.”
Some high-level media including the Wall Street Journal and Fox News have used the word bailout to describe the NCUA’s actions. Fryzel, who was NCUA chairman when the corporate crisis started in early 2008, noted that during an interview with CUNA President and CEO Bill Cheney, Fox News ran a caption at the bottom of the screen calling the plan a bailout while Cheney explained onscreen why it wasn’t a bailout. The interviewer even thanked Cheney for helping him understand why it wasn’t a bailout.
Fryzel said the difference between what really was a bailout of banks and the plan to solve the corporate credit union crisis is that taxpayers funded the bank bailout.
The NCUA’s Corporate System Resolution calls for local credit unions to pay off government-backed bonds issued by the agency.
“(Credit unions) are paying their own way to clean up their own problem,” Fryzel said. “It’s still the strongest financial system out there.”
Matt Biliouris, special assistant to the NCUA executive director, said the numbers being thrown around to resolve the corporates’ legacy assets crisis can be a little overwhelming for leaders of some credit unions. He said the agency’s goal is to create a seamless transition so services are not interrupted and consumers are unaffected.
“This was never about the corporate credit unions,” Biliouris said. “This is about the consumers.”
The NCUA will continue to operate the five conserved corporates for two years to provide time for local credit unions to make an orderly transition to a new service provider. Fryzel said that during that time, credit union leaders should expect to hear from several corporates making pitches for why they should join them. In fact, Fryzel said the NCUA wants the corporates to make those pitches to credit unions.
He added that the agency has put several resources on the Web site to help local credit unions make the transition. Click here to learn more about NCUA’s Corporate System Resolution.
Part 1: Regulator Says Private-Label Mortgage-backed Securities Led to Crisis
Part two - Town Hall: Credit Union Suggestions Have Helped Shape Corporate System Rule