Matz Urges Credit Unions to Knock Out
Predatory Lenders
March 1, 2005, Washington, D.C. – In an impassioned speech to 4,000 participants at the Credit Union National Association’s Governmental Affairs Conference, NCUA Board Member Debbie Matz suggested that credit unions “look beyond banks and challenge other, perhaps more menacing, opponents – predatory lenders.”
“While banks and credit unions are busy fighting each other, predatory lenders are cornering the market in neighborhoods across America,” Matz observed. “There are more than twice as many predatory lenders than banks and credit unions combined. In countless communities across this nation, predatory lenders are on virtually every street corner. These competitors are making a killing by preying upon consumers who are not served by banks or credit unions.”
“I urge you not to sit on the sidelines and watch potential members get whacked every time they need money,” Matz emphasized. “If you don’t stand up to predatory lenders, they will go after your members. They’re already advertising in your field of membership and actively working against you. So I encourage all credit unions to compete with payday and other predatory lenders. I believe if credit unions confront predatory lenders head-on, you can knock them out!”
“They may think that credit unions are the underdogs in this fight,” Matz related. “But they don’t know you! I have seen the dedication and energy of credit union officials and volunteers. I know that with the strength of your conviction to the credit union philosophy of ‘People Helping People,’ you can take on predatory lenders and win!”
“You don’t have to look far for inspiration,” Matz advised. “Across the country, credit unions are offering powerful alternatives to predatory lending.” She shared several outstanding examples:
- Alternative to Payday Loans – Windward Community Federal Credit Union in Hawaii offers small, short-term loans with approval in minutes. “These loans help members survive financial emergencies without paying excessive fees or falling into a long spiral of debt,” Matz related. “It’s such a simple solution! And as a result, there are no payday lenders outside the military base where the credit union is stationed. The credit union is beating payday lenders at their own game.”
- Alternative to Refund Anticipation Loans – Three small credit unions (Union Settlement, Lower East Side People’s, and Homesteaders) fought back against refund anticipation lenders in New York City’s poorest neighborhoods. The credit unions’ consortium trained 100 volunteers to ensure that low-income workers claimed all the Earned Income Tax Credits they were due. They saved taxpayers $600,000 in fees by preparing 2,600 returns for free. “This Volunteer Income Tax Assistance is available through a partnership between NCUA and IRS,” Matz explained. “If every credit union offered this extraordinary service, credit unions could take down the predatory lenders who prey upon low-income tax filers.”
- Alternative to Predatory Mortgages – St. Mary’s Bank Credit Union in New Hampshire is partnering with a non-profit community group (Manchester Neighborhood Housing Services) to provide down-payment assistance for borrowers with low-to-moderate incomes. Borrowers receive up to 100 hours of counseling on life skills, budgeting, and property management.
“This not only helps members buy their first home, but also keep their home,” Matz affirmed. “The partnership has been recognized as a major success in the revitalization of Manchester’s worst neighborhoods.”
Matz demonstrated how credit unions benefit from offering such innovative alternatives. She noted several credit unions that have increased membership by 20-30% after reaching out to underserved consumers. “When credit unions help people break free from the grip of predatory lenders, they bring in new members who remain loyal to their credit union for life,” Matz maintained. “And these loyal new members also help in the effort to defend credit unions’ tax exemption.”
As she reminded GAC participants, “Lawmakers evaluating your tax exemption have asked you to demonstrate your ‘good and worthy cause.’ What better cause than offering affordable financial services to constituents who were being ripped off by predatory lenders!”
“So when you knock out predatory lenders,” Matz concluded, “you will defend credit unions’ title as the undisputed consumer champion. You will build tremendous strength as you fight back against the banks and protect your tax exemption. Most important, you will make a positive impact on the lives of millions of new members.”
For the full text of Board Member Matz’s speech to CUNA’s Governmental Affairs Conference, visit http://www.ncua.gov/news/speeches/speeches_matz.html
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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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