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There is an old saying that “success has many fathers, but failure is an orphan.” Since the NCUA’s response to the corporate crisis of 2008 and 2009 is viewed by most as a success, many claims of paternity have arisen. The corporate crisis presented a potentially fatal problem for the credit union system, as acknowledged in NCUA Chairman Debbie Matz’s written testimony before the House Financial Institutions and Consumer Credit Subcommittee on July 23:

When I returned to the NCUA Board in August 2009, in the wake of the Great Recession, the credit union system was on the brink of collapse. To prevent this, we developed an unprecedented mechanism to securitize $50 billion in toxic corporate credit union assets.

Many people played pivotal roles in making the corporate resolution program a success and it is important to acknowledge the specific contributions of these key participants. In particular, former NCUA Chairman Mike Fryzel and NCUA staff members were instrumental in developing the core infrastructure of the agency’s response to the corporate crisis and negotiating its terms with Congress, Treasury and the Federal Reserve. Because I was not involved in the development, negotiation or implementation of the NCUA’s strategy, I decided to beam myself back to those gloomy days of 2008 and 2009 and develop a timeline of actual events so as to assist my understanding of who played what role in the development of the NCUA’s response to the corporate crisis.

My research confirmed that many aspects of the agency’s corporate stabilization efforts were completed, and the foundation for the resolution and reform strategies were laid, during Chairman Fryzel’s tenure from August 2008 to August 2009 – when decisive action to prevent the collapse of the credit union system was most needed. Subsequently under Chairman Matz’s tenure, the NCUA Board and staff, including Board Member Fryzel, worked to finalize and implement the resolution and reform plans. The success of these plans was only possible because of the work begun during Chairman Fryzel’s term.

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