On May 20, 2009, then Chairman Fryzel appeared before the same Financial Services Subcommittee as did Chairman Matz, and described the events of the preceding nine months and the actions that had been put in place to prevent a catastrophic failure of the credit union system.  In his testimony, related releases and other developments and statements Chairman Fryzel made the following points:

• In the summer of 2008, unrealized losses from investments in mortgage backed securities placed significant pressure on corporate credit union liquidity. To stabilize the system, Congress granted the NCUA's request to secure the full $41.5 billion Central Liquidity Facility borrowing authority, which had been capped at a level of $1.5 billion. This authority would become vital to the NCUA's stabilization and resolution efforts, as evidenced by the fact the agency ultimately infused more than $20 billion in liquidity assistance into the corporate system.
• Between August 2008 and August 2009, the NCUA initiated the development of a broad set of corporate reforms to address investment authority, risk calculation, corporate governance and other aspects of corporate credit union reforms with the intention of yielding a stronger, more durable corporate credit union network. 
• In October 2008, the NCUA put in place the temporary corporate credit union liquidity guarantee program to facilitate essential market funding in the stressed corporate credit unions.
• In November 2008, the NCUA created the Credit Union System Investment Program and the Credit Union Homeowners Affordability Program. With the launch of these programs, the CLF provided $4.8 billion in liquidity through CU SIP and $164 million through CU HARP.
• In January 2009, the NCUA put in place the temporary corporate credit union share guarantee program to retain vital deposits in the corporate system. The NCUA also infused $1 billion, via an NCUSIF capital note, into U.S. Central Corporate Federal Credit Union.
• In March 2009, the NCUA conserved the two largest corporate credit unions – U.S. Central Corporate Federal Credit Union and Western Corporate Federal Credit Union – preventing the potential disruption of vital payment systems relied on by almost the entire credit union system. The NCUA Board also approved the draft Temporary Corporate Credit Union Stabilization Fund legislative request, which became law in May 2009 when President Obama signed the Helping Families Save Their Homes Act of 2009. The NCUA's borrowing authority was also increased as recommended by Chairman Fryzel.  Both of these authorities were fundamental elements of the NCUA's resolution strategy.
• The idea and preliminary plans to create a bridge facility using the good bank/bad bank model to separate toxic assets from non-toxic assets of the corporate credit unions, and the related creation of the successful NCUA Guaranteed Note program, were developed and set in play during the summer of 2009. Chairman Fryzel had the vision and resolve to put into motion such a bold and unprecedented, yet absolutely necessary and inspired, plan.

Clearly the seeds of the corporate resolution program were planted and cultivated during Chairman Fryzel's tenure. Chairman Matz inherited a set of vexing and problematic issues that required significant time, attention, creativity and skill. The agency under Chairman Matz's leadership effectively followed through to turn the plans into reality, and handled the many implementation challenges successfully. Yet any discussion of the program remains incomplete without a straightforward acknowledgement of Chairman Fryzel's essential contribution during the darkest days of the corporate crisis when the survival of the credit union system was at risk. It's an admirable accomplishment to implement a complex program under extraordinarily troublesome circumstances; it's equally if not more so to develop the ideas de novo under intense pressure and resistance from key sectors of the credit union community. When the Wall Street Journal reported on Aug. 11, 2008 – just two weeks after Chairman Fryzel took his oath of office – that the five largest corporate credit unions faced serious unrealized losses on their mortgage backed securities, the new chairman rolled up his sleeves and quickly took the bull by the horns, rather than wave off the losses as a temporary market dip, as most in the industry did at the time.

Chairman Fryzel demonstrated leadership and creativity by working with NCUA staff, Congress, Treasury and the Fed to develop a series of responses to the corporate crisis that saved the credit union community as we know it today. This is a significant achievement, a triumph of intellect, leadership, teamwork and persistence that should serve as a hallmark for future NCUA Board actions in other, less troubled times.

As a success, the NCUA's response to the corporate crisis of 2008 and 2009 has several fathers, including the members of the NCUA Board who served during that period. And that's why the record should unambiguously note the critical contribution of Chairman Fryzel, his Chief Policy Advisor Sarah Vega, and NCUA Board members and staff who made the program a success.  Chairman Fryzel and NCUA staff reacted in real time – without a template from Treasury or the Fed – to rescue the credit union community through the employment of a market-oriented approach and without a TARP-like bailout from the taxpayers. Chairman Matz, her Chief Policy Advisor Steve Bosack, and NCUA Board members and staff ably continued and finished the challenging undertaking after she became chair. From a broader public policy perspective, it is imperative that we recall all aspects of the NCUA's response to the corporate crisis so as to assist members of Congress and regulators in efficiently and effectively navigating future economic challenges to the viability of the credit union community in a transparent and fully accountable manner.

J. Mark McWatters is board member for the NCUA. He can be reached at 703-518-6300 or [email protected].