PALM BEACH, Fla. (Nov. 15, 2013) – National Credit Union Administration Board Member Michael E. Fryzel today discussed a changing regulatory landscape and called for “right sizing” the agency’s rules on risk-based capital.
Fryzel spoke to more than 110 credit union league presidents, board chairmen and government affairs professionals at the American Association of Credit Union Leagues’ 2013 Winter Meeting.
“Risk-based capital, properly formulated, should match up with the real-world activities of a credit union,” Fryzel said. “Greater net worth might be necessary, depending on the type of activities that credit unions pursue as they serve their members. I advocate neither an overly stringent nor an overly permissive approach. I advocate ‘right sizing’ NCUA’s risk-based rules.”
NCUA announced this summer that the agency is working to propose a new risk-based capital framework tailored to protect the industry and consumers from losses.
“A credit union’s function is serving customers’ financial needs, which by definition carries risk,” Fryzel said. “I want NCUA to recognize that risk, not as an extraordinary characteristic that should be avoided, but as part of doing business as a provider of financial services in the 21st century. I want to see standards that are as minimal as possible and as much as necessary. I will be keeping this vision in mind as NCUA considers changes to the industry’s risk-based capital rules.”
Fryzel also highlighted the regulatory impact of the changing landscape of credit unions over the last five years.
“The financial landscape has clearly changed,” he said. “Regulation has shaped, and in turn been shaped by, the aftermath of the financial crisis. I believe NCUA has successfully and appropriately applied the tough lessons learned from the market meltdown to our regulation and supervision of the credit union industry.
“Whether it is an enhanced examination process that apportions our resources in an effort to mitigate, or prevent entirely, problems that can cripple an otherwise healthy credit union and cost your members money, or whether it is new regulations designed to foster a safer, sounder, more realistic capital regime, NCUA is working to stay abreast of an evolving industry,” Fryzel concluded.
The full text of Board Member Fryzel’s address is available here.
NCUA is the independent federal agency created by
the U.S. Congress to regulate, charter and supervise
federal credit unions. With the backing of the full
faith and credit of the United States, NCUA operates
and manages the National Credit Union Share
Insurance Fund, insuring the deposits of nearly 100
million account holders in all federal credit
unions and the overwhelming majority of
state-chartered credit unions. At
Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.