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Chairman Matz Introduces the “New NCUA”

Industry Evolution, Rapid Growth, Emerging Risks Driving Change

WASHINGTON (Feb. 25, 2013) – National Credit Union Administration (NCUA) Board Chairman Debbie Matz unveiled the “new” NCUA,  more responsive to emerging risks, industry challenges and credit unions’ needs, in a keynote speech today.

Matz spoke on the opening day of the Credit Union National Association’s Government Affairs Conference in Washington, D.C. She reviewed the credit union industry’s progress since the Great Recession. She also described a new industry environment marked by rapid growth in assets, loans and membership that exerts growing influence on America’s economy.

That environment, she said, demands strong, effective, flexible regulation that protects safety and soundness without hampering growth or innovation.

“We’re modernizing and revitalizing NCUA for an industry that is newly vibrant, increasingly complex and rapidly changing,” Matz said. “NCUA is reassessing and retooling our business model. The rules of the road that guided credit unions in earlier decades may not meet your needs or your members’ needs today. We must stay ahead of the curve.”

Matz discussed her vision behind the changes. Regulators, she said, have both a responsibility to protect the industry and to help it grow.

“Sometimes U.S. regulatory bodies put the brakes on change until the regulators can catch up. But that’s not the choice NCUA is making—not on my watch,” Matz added. “We can either try to slow it down, or we can do everything in our power to move forward ourselves.”

Challenges Ahead for Credit Unions

Matz told her audience growing industry complexity is creating new services and promoting greater portfolio diversity and presenting new challenges.

“Credit unions are offering more and different products, diversifying their holdings and growing real estate and member business loan portfolios,” Matz noted. “New types of complexity have introduced new types of risk, and prudently managing those risks is a new challenge.”

Some of the emerging challenges for credit unions include:

  • Interest-rate risk from long-term, fixed-rate loans;
  • Interest-sensitive deposits;
  • New technologies like mobile banking; and
  • Concentration of assets in the largest credit unions.

New People, New Policies at the New NCUA
To address emerging challenges for credit unions, Matz noted the new NCUA has two parts: new people and new policies.

NCUA is replacing retiring experienced staff with new blood from outside the agency and talented staff promoted from within. Since 2009, 75 percent of NCUA offices have a new director, and 40 percent of the agency’s examiners have been with NCUA fewer than five years.

Matz noted NCUA is ranked as one of the best places to work in the federal government.

There is also a greater diversity of skills among staff, Matz said, including people with specialized expertise in economics, capital markets, business lending, investments and information technology. She added NCUA staff will have the training and tools needed to do their jobs.

“We’re not just hiring accounting majors,” Matz said. “The tools of the trade are changing, and so is our workforce.”

Matz vowed to continue her Regulatory Modernization Initiative and reviewed several of its major accomplishments in the past year, including:

  • Fixing the agency’s Troubled Debt Restructuring rule to keep more credit union members in their homes and ease credit union reporting burdens.
  • Removing red tape from the process of designating a low-income credit union, which has added more than 800 designations and encouraged more small business lending.
  • Exempting more than two-thirds of all credit unions from certain NCUA rules by raising the asset threshold for small credit unions from $10 million to $50 million.

Matz added NCUA will provide more clarity, consistency and flexibility to encourage innovation while protecting safety and soundness.

“The new NCUA is not here to hold credit unions back. We are here to guide the industry forward,” Matz concluded. “My goal is for the new NCUA to set the standard for what an effective regulator should be. Whether NCUA reaches that goal won’t just be judged by our success, it’s really ultimately judged by your success.”

The full text of Chairman Matz’ speech is available here.

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the U.S. Government, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 94 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions.

–NCUA–

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