Matz: Fiscal discipline, transparency and communication mark NCUA’s operations

Chairman Tells House Subcommittee Agency Is Committed to Regulatory Relief

ALEXANDRIA, VA (July 23, 2015) — Heeding the lessons of the recent financial crisis, the National Credit Union Administration is committed to fiscal discipline, operational transparency and open communication, Board Chairman Debbie Matz said today.

Matz testified at a hearing on NCUA’s operations and budget before the House Financial Institutions and Consumer Credit Subcommittee. A copy of the Chairman’s testimony is available online here.

“The credit union system and NCUA are in remarkably better condition than when I became Chairman,” Matz said. “When I came back to NCUA in 2009, in the wake of the Great Recession, the credit union system was on the brink of collapse. NCUA’s budget and staffing in the years leading up to the crisis had not kept pace with industry growth and increasing complexity. NCUA had cut 91 staff positions even though industry assets had increased by 73 percent. The budget as a percentage of credit union assets had declined 35 percent. The agency was understaffed and under-resourced. We have rectified those problems while preventing any unnecessary budget and staffing growth.”

Zero-Based Budget Process Is Transparent

NCUA’s annual budget, Matz said, is developed from the bottom up through a zero-based budgeting process in which every item is carefully scrutinized.

“Every office in the agency must justify its staffing level and each expenditure,” Matz said. “Through this process, we efficiently allocate resources toward priorities detailed in NCUA’s Strategic Plan.”

The agency provides extensive detail on its annual budget in a dedicated resource center on its website, Matz said.

“NCUA leads financial institutions regulators in budget transparency,” she said. “Our budget resource center includes annual fund audits, budget summaries and slides, office-by-office spending plans and a host of other information, exceeding what other financial regulators disclose.”

Hand-in-hand with prudent budgeting is resource allocation that keeps pace with a growing, changing credit union system, Matz said, citing the agency’s shifting of supervision to areas of greater risk as an example.

“To provide more supervision to credit unions that pose greater risks to the Share Insurance Fund, we’ve reallocated exam hours away from smaller credit unions and toward larger ones, rather than simply adding new examiners,” she said.

As the agency eases regulatory burdens and responds to emerging risks, Matz said, its supervision, staffing and budget must keep pace with credit union growth and complexity.

Communication Results in Regulatory Relief

Matz said NCUA’s Board is committed to providing regulatory relief that does not compromise safety and soundness, and communication is essential to that effort.

“Providing transparency and communicating effectively with all stakeholders are among my top priorities,” Matz said. “This is one of the most important aspects of my job. To this end, I’ve held 18 in-person Listening Sessions, hosted 11 town-hall webinars and crisscrossed the country speaking to and meeting with tens of thousands of credit union officials representing every state.”

Matz said that, since the launching of the agency’s Regulatory Modernization Initiative in 2011, NCUA has taken 18 actions to cut red tape and provide lasting regulatory relief. Listening to the people who run credit unions has had a significant impact on NCUA’s regulatory process, she said.

“I heard their concerns about our exam process,” Matz said. “I heard we needed to target regulations to risk. I heard our member business loan rule was too prescriptive. I heard we should remove the cap on fixed assets. I heard we needed to streamline how we approve fields of membership and reduce burdens on small credit unions. We listened, and we acted. We’ve relieved unnecessary burdens and modernized regulations. We continue to act on all practical suggestions as we move to a principles-based regulatory framework and enhance credit unions’ powers within our authority.”

Effective Regulation has Been Key to Credit Union System Recovery

Matz said America’s credit union system has experienced a strong recovery from the financial crisis, in part due to agency efforts.

“Key system metrics have recovered to pre-crisis levels,” she said. “While the recovering economy is in part responsible, credit is also due to credit union CEOs, managers and boards who made tough choices to keep their institutions solvent. Credit also goes to NCUA’s staff who supervised credit unions under very difficult circumstances. We are now on the right track.”

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 nearly 100 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.

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