Press

Matz: FSOC an “Unheralded Success Story”

ALEXANDRIA, VA (May 7, 2014) — National Credit Union Administration Board Chairman Debbie Matz made the following statement following the release of the Financial Stability Oversight Council’s 2014 annual report:

“I want to join the other members in expressing my thanks to the FSOC staff and the staffs of the member agencies for their hard work on this report. As the longest-tenured member of FSOC, I feel I have gained some important perspective on the Council and its work.

“FSOC is an unheralded success story. Working together on projects like the annual report has strengthened ties between FSOC member agencies and organizations, increased collaboration, and created new and beneficial lines of communication and important venues to discuss views on new and emerging risks.

“The report writing process is a valuable exercise for me and for NCUA in our role as supervisor and insurer of the credit union system. It is important for us to be continually reconsidering and evaluating risks to the credit union system. Participation in FSOC and the annual report are valuable components of that process.

“I urge members of the credit union system to read this report, because financial stability and the health of a growing economy are critical to the success of the industry.

“I want to briefly highlight some risks and recommendations in this year’s annual report that are particularly critical to the credit union sector:

“The Council recommends that agencies continue to promote forward-looking capital and liquidity planning. I am happy to note NCUA recently finalized a stress testing and capital planning requirement for credit unions with more than $10 billion in assets, and we are receiving public comment on a modernized risk-based capital rule.
“The Council also identifies the risk of increased interest rate volatility. Over the last several years, many credit unions increased their exposure to fixed rate real estate and more recently have dramatically lengthened the tenor of their investments. These changes have exacerbated exposure to interest rate movements. The Council recommends that supervisors continue to monitor and assess the growing risks resulting from the continued search-for-yield behaviors, as well as the risks from potential severe interest rate shocks. I can assure you this is a high priority area for NCUA.
“The report notes, ‘the financial system has undergone significant changes resulting from technology, competitive forces and new regulations.’ This is certainly true in the credit union system, and we will continue to embrace the recommendation to ‘remain attentive to the potential implications for financial stability that may arise from developments in financial products, business practices, and migration of activities.’
“Finally operational risks, including cyber-security risks, are an emerging and rapidly changing threat. Credit unions are not immune to this threat, and this will be an area of continued emphasis and guidance.

“I look forward to continued discussion and collaboration with this group.”

The 2014 FSOC annual report is available on the Council’s website. Matz is one of 10 voting members of the Council.

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the U.S. Government, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 96 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. AtMyCreditUnion.gov and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues..