Board Perspectives
THE THIRD TIME IS THE CHARM: TDRs
BY GIGI HYLAND, NCUA BOARD MEMBER
Over the past year, I’ve written twice
about Troubled Debt Restructurings or
TDRs. In February 2011, I wrote about
the “TDR Tango” and a webcast that
NCUA hosted in early January 2011
entitled Troubled Debt Restructurings (TDRs): What are
They and How Does the Accounting Work? In July 2011, I
wrote “The TDR Tango: Take 2.” It discussed possible
guidance the agency would be issuing in the form of a
proposed Interpretive Ruling and Policy Statement (IRPS).
Issuance of the proposed IRPS was delayed until last month
in order to address additional questions that had arisen
regarding TDRs.
; revises regulatory reporting requirements related to TDRs; and
; reaffirms the existing policy and practice within the credit
union industry of placing loans on nonaccrual status when
they reach 90 days past due. The proposal also makes
corresponding changes to 12 CFR Part 741 relating to
requirements for federal insurance.
A proposed rule and accompanying IRPS 12-1 issued at last
month’s Board meeting:
As noted in the proposed IRPS, NCUA Call Report data
illustrates credit union loan modifications have increased 21
percent from September 2010 to September 2011, proving
credit unions are working with their members during this
stressful economic downturn. Federally insured credit unions
reported $13.5 billion in outstanding balances of loans that
have been modified on the September 2011 Call Report, of
which 62.6 percent, or $8.5 billion, are TDR loans.
; establishes standards for the management of loan workout
arrangements that assist borrowers;
Given the importance of these issues, particularly in today’s
economy, I urge credit unions to provide comments on the
proposed IRPS and the questions posed by the Board.
NO MR. NICE GUY
BY MICHAEL E. FRYZEL, NCUA BOARD MEMBER
There is a well known proverb that
reads: “You can please some of the
people some of the time, but you cannot
please all of the people all of the time.”
I have often quoted the words of President Ronald Reagan
when he said, “Government’s first duty is to protect the
people, not to run their lives.” And I have repeatedly said I
agree with those words.
I honestly believe that was written to
describe the role of a financial regulator. At least that has been
my experience when I served as Director of the Illinois
Department of Financial Institutions and now at NCUA.
I cannot recall anyone involved in the financial services
industry saying that they were underregulated and more
regulations were needed. More than likely if they did make
such a comment the self-appointed guardians of the industry
would write a lengthy column or a short cute blog chastising
the individual and calling them unfit to be part of the
financial services sector.
Government is too big, and the federal bureaucracy is out of
control. There are too many agencies and too many
regulations. It takes too long to get anything done because
even the regulator has regulations they must follow. It is
frustrating for everyone.
However, a degree of regulation is required for the protection
of the people. When a person’s life savings are at issue, the
safety of those funds and the soundness of the institution that
holds them are paramount. A regulator must determine what
and how much regulation is needed to make the necessary
decisions, popular or not.
CONTINUED ON PAGE 7
The NCUA Report is published by the
National Credit Union Administration,
the federal agency that supervises
and insures most credit unions.
Debbie Matz, Chairman
Christiane Gigi Hyland, Board Member
Michael E. Fryzel, Board Member
Office of Public & Congressional Affairs
John Zimmerman, Editor
jzimmerman@ncua.gov
National Credit Union Administration
1775 Duke Street, Alexandria, Va. 22314-3428
