NCUA Board Member Michael Fryzel told Credit Union Times that the total cost for the first year of the derivatives program that was finalized on Thursday is approximately $2.6 million.
Fryzel said the industry should know every credit union is paying for the program even if they do not participate.
"I just wanted the industry to know what this program is going to cost in total. The $750,000 is basically the first year cost for outside resourcing of things that may be needed," Fryzel said in a video interview after the monthly NCUA board meeting on Thursday.
He pointed out that the NCUA is devoting six individuals to the program.
"All their related costs is about $1.9 million a year which then takes the program total cost for the first year to approximately $2.6 [million]," Fryzel told Credit Union Times.
"I just wanted the industry to know that whether you are involving in the program or not, all credit unions are going to be paying for it," he added.
Related NCUA Video Interviews:
Risk-Based Proposal Shows NCUA's Independence: Video CUTs
Matz on Risk-Based Capital and Call Report Fines: Video CUTs
Credit Union Times also asked Fryzel why he thinks now is the right time for the agency to propose a risk-based capital rule. NAFCU and CUNA have said that any risk-based capital requirements should come from Congress instead of the NCUA.
"The current 7% leverage capital standard was set by statute in 1998, and it would take an act of the U.S. Congress to change the statute. However, NCUA Chairman Debbie Matz said in July that the recent financial crisis and industry changes have sparked an agency interest in implementing the law with a newer, more flexible, forward-looking approach," said CUNA in advance of Thursday's meeting.
"The omission from Dodd-Frank really doesn't matter a lot when you consider that they need greater capital to continue operating in the financial sector," Fryzel said on Thursday.
"As to whether it should be a legislative fix, we can't wait for Congress to act on everything because Congress is too busy with a lot of other things and this may never happen," he added.
In the video interview, Fryzel also shared the story behind the special tie he was wearing at the NCUA board meeting.
"The designer of this tie is Emily Yang who is the 13-year-old daughter of one of our employees here at the NCUA," he said.
"Emily is not only a very talented individual but she's a cancer survivor," he added.
Fryzel said he wore the tie in honor of Yang, who was recently named an ambassador for Johns Hopkins Hospital.
"It's hard enough to be a kid but then to carry the fact that you have cancer with you and to fight it, they are an inspiration to all of us," he said.
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