Tough Love Saved Credit Unions from Even Higher Premiums

In a speech before the Credit Union National Association's Government Affairs Conference, NCUA Chairman Debbie Matz said that NCUA's tough love saved credit unions from "hundreds of millions of dollars in additional insurance premiums."

She stated in her speech that in the last 18 months, several billion-dollar credit unions were on the verge of failure. If these CAMEL 4 credit unions had failed, credit unions faced an additional $1.5 billion in premiums.

She outlined specific steps that NCUA took to keep credit union failures from having a catastrophic impact on the National Credit Union Share Insurance Fund (NCUSIF).

1. NCUA crafted very prescriptive enforcement actions to commit certain problem credit unions to specific performance targets.

2. NCUA arranged marriages for credit unions that simply could not survive on their own.

3. NCUA "worked with several credit union boards to select new CEOs who had the skills and experience to address the specific problems that their credit unions faced."

4. NCUA conserved some credit unions withy the goal of returning the credit unions back to their members.

She noted that these actions were not popular; but concluded that if these actions had not be taken, the NCUSIF would have incurred significant losses.

She also mentioned that to help catch problems before they festered into larger problems, NCUA had shortened the exam cycle from 18-months to 12-months and had expanded its budget to employ more examiners.

To read the speech, click here.