WASHINGTON – In a House Financial Services Committee hearing Thursday, NCUA Chairman Debbie Matz told members of Congress that the NCUA has rectified the problems that have plagued credit unions since the Great Recession.
Matz said that upon her return to the NCUA in 2009, the credit union system was on the brink of collapse. The U.S. Treasury and Congress had agreed earlier that year to fund corporate stabilization.
"To prevent this, we developed an unprecedented mechanism to securitize $50 billion in toxic corporate credit union assets," she said. "Additionally, 351 consumer credit unions holding $51.6 billion in assets were close to failing by May 2010. Compounding this situation, the NCUA's budget and staffing in the years leading up to the crisis had not kept pace with credit unions' growth and increasing complexity. In fact, during the seven years leading up to the crisis, the NCUA had cut a total of 91 staff positions – even though credit union assets had increased by over 70%. During this same period, the NCUA's budget as a percentage of credit union assets declined by 35%. The NCUA was understaffed and under-resourced."
Recommended For You
Despite multiple sources stating recently that credit unions should not be blamed for the economic collapse, Matz said in her testimony that "a series of NCUA rules beginning in 2010 will prevent corporate credit unions from taking the level and type of risk that caused the corporate credit union crisis. Regulations now prohibit purchases of private-label mortgage-backed securities, set clear investment concentration limits according to risk, increase incentives to diversify portfolios, and require higher-quality capital."
The hearing focused on the NCUA's budget and other oversight issues.
Matz also suggested that budget increases were necessary due to the complexity of the problem and the need to retain talented regulators and evaluators.
"The experiences of the recent financial crisis have also informed the NCUA's current budgeting decisions," she said. "Budgets cannot be aimed at consistent staff cuts, as was the case for seven consecutive years leading up to the Great Recession when the agency held budget hearings. Instead, the NCUA's resources and staffing need to keep pace with the risks and complexity of the credit union system. The NCUA Board has now achieved that appropriate balance, while preventing any unnecessary budget and staffing growth. The committee is also expected to blame the NCUA for regulating credit unions out of conformity rather than necessity.
"The financial crisis also demonstrates why the NCUA must maintain needed resources in positive economic cycles to prepare for downturns. As the crisis hit, the NCUA quickly needed to augment our pool of examiners to address significant increases in the number of credit unions experiencing balance sheet and operational problems. However, developing fully seasoned examiners requires several years of training and experience, and there were limited talent pools from which to draw these experts. Moreover, other banking agencies were competing for this same talent as the crisis took hold."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
