SAN FRANCISCO -- NCUA Chairman Michael Fryzel introduced himself to a full house of West Coast credit union professionals when addressing the California and Nevada Credit Union Leagues conference and annual meeting audience during a morning general session.
One of the new chair's goals is a complete overhaul of the audit process, with Fryzel calling for a completely rewritten exam and more frequent visits to credit unions. The chairman's comments regarding more frequent exams had conference goers buzzing, wondering if the remarks were directed at all federally insured credit unions or just those that have suffered losses.
"Eighteen to 24 months between exams is totally unacceptable in this environment. We need current, meaningful data," Fryzel said. He continued, "it's no longer sufficient to just change or update sections, a complete review and rewrite is needed."
Examiners will be "closely monitoring" strategies to manage balance sheet risk, he said, particularly because of an increase in real estate loans kept on the books over the past 10 years.
Fryzel also stressed the importance of protecting consumers' rights, calling for more prominent disclosure processes, and simpler language for applications and other financial documents.
The chairman touched on the corporate system, reassuring league members of the corporate system's strength and stability but hinting at possible restructuring moves to come. That remark gained importance once word spread through the conference that Kent Buckham, long-time NCUA director of the Office of Corporate Credit Unions, had the previous day been transferred from his post to another NCUA department.
"The NCUA is committed to working with the corporates to do what's necessary to maintain the integrity of our core deposits," Fryzel said, "and I urge every trade organization, league and natural person credit union to lend their full support to our efforts to keep the credit union movement alive and vibrant."
Fryzel also announced plans to apply a broader stress test to the share insurance fund, to ensure it will withstand further market dislocation stress.
"This crisis is much broader than anyone expected, and we don't know when it will end," he said.
He spoke highly of private insurers American Share Insurance, saying he worked with the group when he was an Illinois regulator, and said he has, and will continue to have, open and regular dialogue with ASI. Representatives from the insurer were on hand at the event.
--handerson@cutimes.com
