ALEXANDRIA, VA. — Deborah Matz has become the first person to serve a second term on the NCUA board, this time as chairman. Matz has returned to the board during one of the most arduous times for the NCUA in recent memory, with CUs' confidence in the agency tested. The new NCUA chairman recently spent time with Credit Union Journal to discuss many of the issues on the minds of CU leaders and the challenges ahead.
Credit Union Journal: Every NCUA chair typically outlines priorities at the beginning of his or her term. Have you done so, and what are yours?
Matz: In some respects my priorities were predetermined by the state of the economy and the significant issues facing credit unions. In the short term we are going to put out a proposed rule on corporate credit unions, and we expect to have that by the end of the calendar year. That is one of the reasons why I am jumping right into a series of town hall meetings so we can get input from the system as to what they think we should be doing and what are the issues they would like to address in the rules.
Another priority is field of membership chartering. My preference is to come up with a field of membership formula so that we don't have these lengthy applications and all the documentation and subjectivity. Right off the bat credit unions will know if their proposal will be approved or not. The formula will make it easier for credit unions and it will save them resources and time.
We are also looking ahead to 2010 and the effect the economy is having on natural-person credit unions. We want to do everything we can to prevent more problems with natural-person credit unions and help them get through this downturn.
CUJ: Not since Ed Callahan has an NCUA chair had to deal with so many troubling issues, including strained liquidity, failing credit unions and corporates, and other crises. What have you done to prepare for the challenges, and how much of the vision of Michael Fryzel for NCUA's proper course of action also remains your vision?
Matz: Having been on the board previously is so significant. I have come in with a very strong knowledge of the credit union network and credit union issues. When I came in last time I started from zero and had to reset everything. But this time I've hit the ground running. And having worked in credit unions for two years has given me some insights that will make me a better regulator.
As far as Mr. Fryzel, I don't want to address his vision. But after reviewing the steps that were taken under his leadership, I think that NCUA did what needed to be done and did it quickly and thoroughly to get us through the corporate crisis with a minimal negative impact on credit unions. I applaud what he did and I applaud the staff.
CUJ: What did your previous NCUA term teach you?
Matz: I came in this time with an extraordinary wealth of information and knowledge about how the credit union system works, the basic issues facing the system, and I have a deep understanding of the [trade groups]. So coming back for a second term has spared me from having to go through a year of basic education and I can just roll up my sleeves and get right down to the issues.
CUJ: Any lessons learned from your past experience on the board?
Matz: I think it's important to deliberate, have an open-door policy and be accessible, and really listen to the NCUA staff and credit union stakeholders. It's very important to give the stakeholders their opportunity to participate — whether that's through comment letters, town hall meetings, or being in their meetings as often as I can.
CUJ: You served for a while as interim CEO at Andrews FCU. What did you learn from that position?
Matz: It taught me about the inner workings of credit unions, about the real business of running a credit union on a daily basis. It also provided me with a sensitivity to the regulatory burden that credit unions have to bear, and not necessarily because of the NCUA. Most of it is statutory. I am amazed that small credit unions can meet the compliance requirements because they are so onerous. So I am very sensitive to that.
CUJ: Every credit union wants to know if additional assessments are in the cards. What can you tell them?
Matz: The board is going to vote at our next meeting in September on the assessment for this year. I don't think there will be any surprises, and we will share information as soon as we get it. My goal is to give credit unions as much information as we can so they can plan accordingly. Our board has already said that it may be somewhere in the range of 15 basis points, but did not commit to that number.
CUJ: The Treasury earlier directed transfer of the Central Liquidity Facility from U.S. Central to NCUA, which bought U.S. Treasury securities with the funds. What is the future of this emergency loan fund?
Matz: I don't think the board has talked about changing the fund in terms of its structure or its future, except as it relates to the fact that stock ownership has been identified for several years as sort of a circular arrangement that does not work. In terms of the functioning of the CLF — its day-to-day activities — it continues to provide backup liquidity. We were also able to get the borrowing authority increased again for this fiscal year of Congress. I don't anticipate changes from the way the fund is working right now.
CUJ: Credit unions have obviously seen numerous failures and mergers this year, at a significant cost to the NCUSIF. What is your view on the overall level of qualifications by examiners to monitor credit unions?
Matz: I think the examiners do a very good job under very difficult circumstances. We have increased the number of examiners this year — adding 50 — and we are continuing to add more. In fact, we are over-hiring to compensate for attrition, so we are always at 100% of our examining needs. There is a constant need for training and we can't send the new examiners into complex credit unions. We have senior examiners training the junior examiners. Our resources are being spread, but I don't see issues down the road. As you know, many state budgets have been cut dramatically, which has affected many examining staffs. We are trying to work in as many states as we can to help them meet their needs.
CUJ: What about NCUA's ability to monitor and supervise the corporate CUs? The agency had an examiner on site at U.S. Central, for instance, yet it failed anyway. Is there some sort of training going on to upgrade oversight capabilities?
Matz: I think there was enough blame to go around with the corporates. There is probably more that our examiners could have done. But I don't hold them responsible for what happened, for a variety of reasons — not the least of which is that our regs did not address the issue of concentration of risk or the quality of the issuances. So they could send letters to the corporates, which they did. But our examiners really couldn't take regulatory action because we didn't have a reg that addressed the key issues. When I was on the board before, I voted against the corporate rule in 2002 because I didn't think it went far enough. So the examiners' hands were tied in many respects. The corporates all had boards made up of credit union officials, and they have staff themselves. They had an obligation to monitor what was going on.
CUJ: To date, what has been your level of communication with CEOs of natural-person credit unions?
Matz: The town halls will be my first foray into that domain, and then I will be addressing the NAFCU Congressional Caucus. I have declined most meetings [with credit unions] I have been invited to because I am trying to spend as much time as I can here dealing with the issues we just discussed.
CUJ: CUNA and NAFCU recently issued a joint task force report on corporate CUs. What is your reaction and will you be meeting with members of the task force?
Matz: It is very valuable for us to get as much information as possible from the stakeholders. And clearly the task force did a tremendous amount of research and provided a very thoughtful document. That certainly will be considered as we move forward with our proposed reg. I meet on an ongoing basis with the representatives from the trades, and we will discuss this issue. But I don't have a specific meeting set up with the people who wrote the report.
CUJ: What is your sense of the view in Congress and at Treasury of credit unions? Will NCUA or credit unions be caught up on financial services reforms?
Matz: I can't answer what their view is because I frankly don't know. But my meetings with senators during my confirmation process went very well. I think they have a very good impression of credit unions and think of them as very safe financial institutions that provide affordable services to their constituents. But it's hard to speculate what will come out at as Congress deliberates.
CUJ: Credit Union Journal has heard from more than one CEO there may be a plan being pushed by the Treasury that calls for major consolidation of credit unions into the 1,000 to 2,000 range. Have you heard that, and are there any plans or anything that might suggest such a plan?
Matz: This is the first I am hearing of that. I have not heard that before and I would be very surprised if there is any validity to it.
CUJ: Compared with recent years, this is a very challenging time to be taking over the reins at NCUA.
Matz: These are difficult times. I have come into this position with my eyes open. I am very excited about it. I think we are going to get through this with credit unions coming out the other end strong, and I believe serving more members. I think that's what counts — not necessarily the number of credit unions — but how many members they are serving and the quality of the services they are providing to members. I feel at the end of this there will be a larger number of credit union members, and they will be receiving more and better services.
