Matz Outlines Five Concerns For CUs In 2005

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NCUA Board Member Debbie Matz said five issues concern her as credit unions enter 2005.

In remarks before the American Association of Credit Union Leagues' annual meeting here, Matz said that, taken together, the five issues "can threaten the future of the credit union movement." Matz' concerns:

* 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.

She cited a Pennsylvania Credit Union Association program that enables credit unions to provide check-cashing services to non-members who are paying high fees at uninsured institutions; a Texas league program in conjunction with Mexican consulates and the International Remittance Network (IRnet) to help credit unions reach more Latinos, and a Montana CU Network program promoting homeownership education and mortgages to Native Americans on reservations.

* Disappearance of Small CUs. "Leagues can facilitate partnerships that help small credit unions get needed training and offer services that will attract more members," Matz observed. She cited as examples an Idaho league program for small credit union officials who need training but cannot afford it; a California league effort to arrange partnerships, networking opportunities, and grants that provide small credit unions with everything from expert staff to new technology to marketing materials, and a Credit Union Association of Oregon effort to provide a full range of services to community development CUs even if they cannot afford to pay their full share of 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. She noted the Colorado League offers a seminar that warns of pitfalls to avoid in indirect lending, and the Michigan League advises CUs 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.

* 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."

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