SAN FRANCISCO — Although she wasn't appearing at a fashion show, NCUA Chairman Debbie Matz wore two hats during her speech Thursday at NAFCU's annual conference.
As regulator-in-chief, she defended the agency's efforts to beef up its supervision of credit unions, which she said was needed to prevent a bad situation from getting even worse.
At the same time, Matz looked ahead and said credit unions won't thrive in the future if they don't improve their technology and marketing to meet the demands of an increasingly savvy younger generation.
She noted that when she took office in August 2009 there were several billion dollar credit unions rated CAMEL 4 and the agency wrote Letters of Understanding and Agreement, found merger partners for some and found new CEOs for others. On a broader level, the agency increased the frequency of its examinations and took other regulatory actions that she estimated saved the industry hundreds of millions of dollars in additional premiums.
Matz said the agency plans to issue additional proposed regulations later this year that will deal with: Limiting the riskiest investments by natural person credit unions, including private label mortgage-backed securities and collateralized debt obligations. And a proposed rule to limit the risks from CUSOs.
She also said credit unions need to do a better job of due diligence and urged them to closely monitor the decisions of vendors on behalf of credit unions. "You need to look at closely as risk as we do. In the past we've seen risky actions taken by CUSOs quickly compound into crises,' she said. Matz also said the credit union industry's future prosperity will be in peril if credit unions don't do a better job of reaching out to younger consumers. "As credit union management and board members, it is your collective job to make sure your credit union educates consumers and dispels dissatisfaction through effective outreach to a younger market. A recent survey found a 30-point difference in satisfaction between members over age 65 versus those under age 30. Simply put, younger consumers just are not satisfied with the credit union experience," she said.
Matz compared the efforts to revitalize the credit union industry with efforts to renovate the Golden Gate Bridge.
"At NCUA, we're doing the prep work. We're putting the scaffolding in place. And we're fixing the structural issues that threatened the safety of the credit union industry. The rest of the revitalization – to put on a new coat of paint, to make it attractive to a new generation of consumers – will be largely up to you," she said.
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