Press
Matz: Dakota credit unions preparing for challenges as oil, farm prices fall
NCUA Chairman Also Discusses Regulatory Relief, Urges Cooperative Efforts
ALEXANDRIA, VA (April 15, 2015) — Falling prices for oil and farm products mean Dakota credit unions need to be ready to serve members in tough times, National Credit Union Administration Chairman Debbie Matz said today.
“Credit unions serving oil workers could face higher delinquencies and charge-offs if job losses mount,” Matz said, “so now is the time to review that business plan and make appropriate adjustments. This could mean changes in underwriting, reserves or balance sheet composition. Those of you from agricultural credit unions have a proud tradition of serving farmers, so I know you’ll work to help members get through this rough patch. With NCUA’s more flexible rule on troubled debt restructuring, you may be able to lower members’ mortgage payments through these lean years.”
Matz spoke to a crowd of approximately 200 as today’s opening speaker at the Annual Summit of the Credit Union Association of the Dakotas in Las Vegas.
Falling oil prices could affect each of the Dakotas differently, Matz said, triggering significant job losses in North Dakota but giving South Dakota consumers more ability to save or borrow. Both states, Matz said, are vulnerable to falling farm prices. The U.S. Department of Agriculture predicts net farm income to drop 32 percent this year, leading to the lowest net farm income since 2009.
In addition to discussing challenges faced by credit unions in the Dakotas, she also talked about upcoming regulatory relief and the ongoing risks posed by cyber threats, rising interest rates and credit unions taking excessive risks with insufficient capital.
“Our number one goal is to keep the credit union system safe, sound and sustainable,” Matz said. “You will have greater freedom in pursuit of that goal.”
Matz’s relief agenda includes:
- Making more credit unions eligible for current relief by raising the asset threshold for defining small credit unions to $100 million from the current $50 million,
- Increasing access to secondary capital for low-income credit unions and allowing supplemental capital to be counted in full in the proposed risk-based capital rule,
- Making it easier for credit unions to expand fields of membership,
- Allowing credit unions to make their own decisions on purchasing fixed assets by eliminating the current five percent cap on those assets, and
- Giving credit unions more resources to invest in members and communities by easing rules on member-business lending.
Matz concluded by promising to keep the lines of communication open between the agency and credit unions, and she said comments and ideas from credit unions play a large role in shaping the regulatory framework.
“I am always open to hearing your good ideas,” Matz said. “We listen, and wherever sensible, we act.”
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 United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 99 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.