Matz wants CU outreach, effective regs at NCUA

WASHINGTON (7/23/09)--National Credit Union Administration (NCUA) board nominee Deborah Matz told assembled Senate banking committee members that if confirmed she would work to establish a strong partnership with the industry while maintaining the "critical arms-length relationship" between a regulator and the regulated.

Matz said she would work to "make certain" that the NCUA would "thoroughly" apply relevant consumer protections, promote "improved financial education," and encourage member credit unions to "reach out to serve all eligible consumers."

Click to view larger image Deborah Matz, the Obama administration's choice to fill a vacancy on the National Credit Union Administration board and become chairman, swears to tell the truth during her nomination hearing before the Senate Banking Committee Wednesday. Matz said her experience as a credit union officer taught her the need for "effective, rather than excessive, regulation." (CUNA Photo)

During her testimony, Matz provided legislators with a window into her regulatory philosophy, stating that her recent work as executive vice president and chief operating officer of Suitland, Md.'s $800 million-in-assets Andrews FCU "sensitized" her "to the need for effective, rather than excessive, regulation." Matz added that as NCUA Chair she would "regulate and supervise credit unions closely, guide them where appropriate, make forceful suggestions, and always appeal to their commitment to their members."

While a number of recently approved changes to the national credit union system have "gone a long way" to stabilizing the corporate credit union system, Matz hinted that further work is needed. Addressing the current weak financial state of corporate credit unions, Matz said that a new corporate rule that would be developed during her tenure would be "fair" and would provide "flexibility" while also providing "sufficient parameters to prevent these events from occurring in the future."

Matz said she plans to begin work on this new rule by discussing it with NCUA staffers, credit union industry members, and other stakeholders, adding that the new rule could be presented by the end of this year.

Matz was the lone member of the NCUA board to vote against corporate regulations presented in 2002, saying in her testimony that she did not believe that those regulations "adequately addressed" the critical issue of "risk concentration" at the time. Matz also cited her belief that "the investment authority being granted was overly broad and permissive" as justification for voting against those corporate regulations.

Matz said she would also closely monitor the effects of the economy on natural person credit unions to "minimize" any potential damage.

Increasing alternatives to payday lending and other sources of short-term loans, as well as aiding underserved consumers through financial education, will also be a point of emphasis for credit unions during her time in office, Matz said.

When asked about the proposed creation of a federal Consumer Financial Protection Agency, Matz said that such a body would be effective as long as it streamlined existing regulations and removed redundancies. However, Matz questioned how this new agency would be funded, stating that she did not believe that many credit unions could afford to pay another assessment due to declines in retained earnings.

The committee hopes to vote on Matz's nomination before it begins its summer work period in early August. Matz's nomination will then move to the full Senate for confirmation.

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