SAN ANTONIO -- NCUA Chairman Debbie Matz told state regulators that the corporate credit union reforms do more than just repair existing damage.
"We can assure you that this crisis will never happen again," she said during a speech at the Thursday session of the NASCUS State System Summit.
She said that the new rule, with its capital standards and changes in corporate governance rules, will make certain that corporates don't make the kind of risky investments that caused such tumult.
Matz said that the plan for dealing with legacy assets was devised with the idea of having credit unions take responsibility while keeping costs down.
"It's not a government bailout. We aren't propping up failed institutions," she stressed. "It's not a rescue or bailout but a comprehensive reform."
She also broke down the agency's decision on how to deal with the legacy assets of the troubled corporates.
"After deducting $1.3 billion in losses that have already been covered, there are $7.0 to $9.2 billion of projected assessments remaining. These figures represent an increase from previously posted Corporate Stabilization Fund reserve levels. The vast majority of the increase is due to updated loss estimates on all underlying corporate assets. This is not due to the resolution strategy itself," she explained. "These costs still to be paid will need to be assessed over the remaining life of the Corporate Stabilization Fund. Now that the Treasury Secretary has agreed to extend the fund from its original expiration date of 2016 to 2021, the NCUA board will have more flexibility in spreading out these assessments to the extent possible to reduce the average annual impact on credit unions."
Matz, whose speech marked her first appearance since the board conserved three corporate credit unions and issued a new rule on the corporates, didn't use the occasion to make a new policy statement, as she often does at such venues. Instead, she expressed optimism that that the board's actions would enable the industry to turn the corner.
"With this new corporate rule and legacy assets plan, credit unions will finally be able to turn the page from unprecedented challenges to a promising future. I am eager to work with you to begin this new chapter in credit union history," she said.
Her speech was part of a broader NCUA effort to explain the agency's decisions to industry officials and lawmakers. Agency officials briefed congressional staff members and members of Congress on the plan, as did lobbyists for CUNA and NAFCU. In addition, the agency has scheduled 11 town hall meetings throughout the country in October. The first session was held on Oct. 5 in Portland, Ore., and more meetings are planned for Atlanta, Boston, Dallas, Chicago, Columbus, Ohio, Detroit, Los Angeles, Orlando, Fla., Phoenix, and Alexandria, Va.
Other board members fanned out to state credit union leagues to discuss the issue.