Fortunately for NCUA and for credit unions, Fryzel is familiar with credit unions, having been the Illinois regulator. He seems the perfect candidate to get in and hit the ground running, which is what the agency and industry need right now.

In a statement on taking the top political post at NCUA, Fryzel promised to be vigilant and offer thorough supervision. While this seems obvious at any time, the current market makes this statement particularly important. Credit unions not only need to reassure their members of their safety and soundness, but it should be reaffirming to credit unions as well that its regulator finds them on firm footing.

Many credit unions have more than ample capital built up to weather this storm, so long as they doggedly performed their due diligence. Take for example, Arizona Federal Credit Union (see story page 1). Even after a $42.5 million loss, its capital level is still above 8%, well above the regulatory minimum. That ratio was made possible by their more than 11% ratio just nine months ago. So, as you can plainly see, capital can be eaten up very quickly after a few wrong moves.

One thing they have done right was to be proactive in informing the public and their membership about their situation. Trying to hide something like this just looks shifty and chips away at the trust relationship the credit union has with its membership, which ultimately will be more damaging.

I'm definitely not saying Arizona Federal is the next Norlarco or Sterlent by any stretch, but NCUA has to be very eloquent about how it handles this situation. Too much oversight--in the wake of those other shuttered credit unions--could impede or even halt the progress in a turnaround scenario; not enough and the $1.9 billion credit union could spiral out of control. NCUA must walk the tightrope of allowing management enough leeway to rectify the situation without being suffocating. For all the griping among credit union executives and officials about their regulators, I doubt many would want to trade places either.

Though NCUA was not the direct regulator of the few credit unions that have closed for business due to bad real estate or indirect lending decisions, as the insurer, the federal agency has absolute authority when it comes to protecting the insurance fund. One has to wonder why the agency did not step in sooner and will it next time a state-chartered credit union appears to be heading toward disaster.

The other question that Arizona Federal raises--again, not that it is on its way to failure--is whether there is such a phenomenon as "too big to fail" in the credit union industry.

This leads me to Fryzel's second mandate: an emphasis on safety and soundness. Again, another obvious choice but since IndyMac, seemingly every credit union trade and many individual credit unions are reassuring the public of their solid financials, conservative lending policies and backing by the full faith and credit of the federal government for those that are federally insured, which are nearly all. What surprises me about this is why it is not a measure taken all the time, not just when an IndyMac strikes.

Credit unions should make their deposit insurance part of their marketing efforts. So many Americans, even credit union members, don't really know what a credit union is. You can bet that even fewer know what NCUA is, much fewer the NCUSIF.

NCUA should be marketing public service announcements as well. I'm not talking about the 30-second radio scripts the agency did in the past. I'm envisioning eggs frying in a hot iron skillet, Got Milk?-style ads. If you want the average American consumer's attention, you have to grab it.

This is just one way Mr. Fryzel could be proactive in the third point he has publicly made about his tenure, and that is protecting the consumer. Yet another unenviable position of a regulator is to balance the business, functions and costs of running a financial institution with the need for an informed credit union member.

Fryzel has the experience needed to understand how credit union regulation should function and a law degree to boot. He has vowed "fair, consistent, commonsense regulation." Seems he has all he needs to get straight to work at NCUA, but especially in the current environment, a little good fortune would not hurt either. Good luck, Mr. Fryzel.

--Comments? E-mail scooke@cutimes.com

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