Matz Shares Concerns for the
Future of Credit Unions
Offers leagues’ initiatives to address these issues
January 28, 2005, Palm Springs, Calif. – In her first speech of 2005, NCUA Board Member Debbie Matz identified five concerns for the future of credit unions and shared many initiatives that credit union leagues are taking to address those issues.
“My concerns are all related issues which, taken together, can threaten the future of the credit union movement,” Matz told league executives at the American Association of Credit Union Leagues (AACUL) Winter Meeting. “Slow membership growth could lead to the disappearance of small credit unions. Reputation risks, along with the disappearance of small credit unions, could lead to taxation. And taxation could lead to more conversions to mutual savings banks.”
Matz explained how “Leagues can take the lead in guiding credit unions around these potential obstacles.”
Slow Membership Growth – “Leagues can encourage credit unions to reach out to the un-banked, especially those from cultures unfamiliar to most credit unions,” Matz suggested.
For example, the Pennsylvania Credit Union Association has begun a program that enables credit unions to provide check-cashing services to non-members who are paying high fees at uninsured institutions. The Texas League is working with Mexican consulates and the International Remittance Network (IRnet) to help credit unions reach more Latinos. And the Montana Credit Union Network is promoting homeownership education and mortgages to improve the living conditions of Native Americans on reservations.
Disappearance of Small Credit Unions – “Leagues can facilitate partnerships that help small credit unions get needed training and offer services that will attract more members,” Matz observed.
The Idaho League finds sponsors for small credit union officials who need training but cannot afford it. The California League arranges partnerships, networking opportunities, and grants that provide small credit unions with everything from expert staff to new technology to marketing materials. And the Credit Union Association of Oregon provides a full range of services to community development credit unions even if they cannot afford to pay their full share of league dues.
Reputation Risks – “Credit unions must be careful before offering indirect lending or bounce protection programs through third parties which charge very high fees,” Matz cautioned. “Leagues are in a position to educate credit unions on how to offer these programs more safely, and without putting their pro-consumer reputation at risk.”
The Colorado League offers a seminar that warns of pitfalls to avoid in indirect lending. And the Michigan League advises credit unions to make bounce protection more consumer-friendly, such as tying their programs to financial counseling or overdraft loans.
Taxation – “Lawmakers want to know what credit unions are doing to help their constituents who are not being served by other insured financial institutions,” Matz related. She encouraged leagues to “continue working with state and federal government officials to demonstrate credit unions’ commitment to serving people of modest means.”
On the state level, the Wisconsin League is beginning a partnership with the State Department of Revenue to prevent un-banked tax filers from being ripped off by predatory lenders. The New York League is partnering with the State Department of Banking, the City Department of Consumer Affairs, and several credit union groups on a public education campaign to reach 800,000 un-banked in New York City. And the Florida League launched a financial education initiative with the State Department of Financial Services to teach consumers who live paycheck-to-paycheck.
Conversions to Mutual Savings Banks – “I’m concerned that credit unions have been converting for reasons that may not be in members’ best interest,” Matz observed. “Leagues are in a position to give members more information than our regulation can require – and more than a converting credit union is likely to disclose.”
The Michigan League waged a public information campaign with advertising, a website and a toll-free hotline to inform members, “Before You Let Them Turn Your Credit Union into a Bank, Know What You’re Giving Up.”
Despite all the threats facing credit unions today, Matz concluded, “I am optimistic about credit unions’ future. Keep sharing your best practices with each other. Together, you can overcome all of these concerns and lead credit unions to an even brighter future.”
For Matz’s PowerPoint presentation to AACUL, log on to
http://www.ncua.gov/news/speeches/speeches_matz.html
A public service veteran of 25 years, Matz was named as a recess appointee to the NCUA Board in January 2002 and nominated to a seat on the Board on February 27, 2002. The U.S. Senate confirmed her on March 22, 2002. As part of the NCUA Board, Matz oversees the regulation of federal credit unions and the administration of the federal insurance fund covering approximately 9,000 credit unions in the U.S.
Matz is a member of three credit unions and resides in McLean, Va. with her husband and two children. Before her appointment to the NCUA Board, Matz was appointed by President Clinton as Deputy Assistant Secretary for Administration in the Department of Agriculture.
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