Fryzel: Coming here, I couldn't have anticipated the events that have occurred. My original plan was to meet with certain staff, find out how things run and implement changes to make things better. But that was put on hold when we saw what happened.

First we went to the Hill and got more money for the central liquidity facility [Congress approved eliminating the artificial cap of $1.5 billion, and now the facility can lend money to credit unions based on the formula established in the Federal Credit Union Act, which is estimated to be $41.5 billion.] so we could help credit unions who might need it. Then, when we found out that Congress was going to do things for banks–allow them to sell bad assets to the government and increase their deposit insurance–we wanted to be included.

The original language of the bill just said financial institutions. So we went to the Hill, worked with the trade associations and got it changed. When they first changed it, credit unions were written in by hand on a draft.

CU Times: What's been the impact?

Fryzel: We've gotten tremendous feedback. It's a tremendous confidence booster. We did the print campaign; we sent out the posters, including one with Uncle Sam. Obviously we need to watch the economy, which changes on a daily basis, and see what else we might have to do. We want to be sure that everything stabilizes as we work through this crisis.

CU Times: How long will this last? When will credit start becoming more available?

Fryzel: No one has all the answers to these questions. If I did, you'd be talking to me, not [Federal Reserve Chairman Ben] Bernanke. I've been telling credit union leaders, get out from behind your desk and go to your lobbies and see what they need. A person-to-person approach is necessary.

CU Times: What do see you coming out of Congress affecting credit unions?

Fryzel: We've gotten all from Congress that we're going to get. Nothing more this year and nothing till at least early next year, after the elections. We are ready to provide them with any information they need. But we only go to the well when we have to. We're going to step back and see what the mood is after the elections.

CU Times: How would you describe the health of credit unions? Are you concerned about the flurry of mergers in recent years and the fact that fewer new charters have been granted this year compared to last?

Fryzel: They'll be fine after they weather the storm. Mergers will always happen. They are sometimes needed because of the poor performance of one of the credit unions. We also encourage people to come up with ideas for new credit unions, especially if they have a field of membership that needs to be served.

CU Times: What changes to do you anticipate making within the agency?

Fryzel: NCUA is a big agency with lots of sections. But we need to look at things like whether field of membership decisions should be centralized in Alexandria or stay in the regions. We also want to look at whether we are examining the right things during exams. We also need to look at the structure of corporate credit unions.

We want to take a fresh look at everything and see if we can do it better.

The current focus is on the economic crisis is on the economic crisis and seeing to it that credit unions are prepared to weather it.

CU Times: Do the current regulations strike the right balance between ensuring safety and soundness and not stifling innovation?

Fryzel: Any agency can do a better job at what it does. Sometimes a new person can look at the situation and rules with a new set of eyes. I was reading an interview in Credit Union Times with Visions Federal Credit Union President Frank Berrish who said he was afraid that with some of the changes he'll be overregulated and he complained about having a 90-question worksheet to fill out before his examination. When I read that, about an hour ago, I e-mailed the appropriate office and asked for a copy. I have an open mind, I'll take a look. Maybe all 90 questions are necessary, maybe some aren't.

We review one-third of all regulations each year. I have looked at some regulations and said to staff 'I don't understand it, please rewrite this in English.' You shouldn't have to have a Ph.D. to understand it. We want to be sure it isn't intrusive or excessive.

CU Times: Will there be an increase in premiums for the National Credit Union Share Insurance Find?

Fryzel: As of today, we're fine. We're not going to shut the door on anything, and that could change because some credit unions are struggling. The credit unions have never cost the taxpayers a penny and we won't.

CU Times: Speaking of hurting credit unions, are you increasing your efforts to find merger partners for credit unions?

Fryzel: Merger is always better than liquidation. If there is a potential partner we are happy about that. If a credit union is interested in a merger we have the tools in place.

CU Times: What has surprised you the most?

Fryzel: The size of the bureaucracy and all the hoops you have to jump through to get things done. Congress has been responsive to our needs, but there is a lot of give and take, it's the nature of the institution.

CU Times: Compare it to Illinois, which is known for having politics practiced by people with sharp elbows?

Fryzel: In Illinois, Chicago politics has been controlled by the Daleys for many years, and they have run it very well. If they want a program implemented, chances are it will be. In Washington, Congress has lots of people who want to be mayor. So there's a lot more give and take.

CU Times: You met with the company that provides private insurance for some credit unions. Why did you do that and are you anticipating having that expanded or contracted?

Fryzel: I've known the top executives there since my days as an Illinois regulator. And nine states allow private insurance. I don't regulate the private insurers, but they are part of the picture. Nine states want that option. Only states or Congress can change that, and I don't anticipate lobbying Congress either way on it.

CU Times: Congress will likely make some changes in the way financial services are regulated. What are your thoughts on what changes should be made and on the Blueprint unveiled earlier this year by Treasury Secretary Paulson?

Fryzel: It's food for thought like everything else. My concern is that Congress might decide to have one giant agency to regulate everybody. Credit unions should be kept separate because their regulator knows and understands them. Any changes to regulations should incorporate my view that they be as little as possible, as much as necessary.

It will come down to what parts of the system they think need to be better regulated. Nobody wants a repeat of what has happened, but the question is how you hit as chord that strikes a balance.

CU Times: What does the new environment–with the banks being bigger and more consolidated–mean for the competitive situation for credit unions?

Fryzel: Credit unions know their members and know their competition. I tell them “do what you do best, serve your members” and everything will work out.

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