WASHINGTON (2/26/13)--Saying that the agency has to modernize to keep up with the growth of the credit union industry, National Credit Union Administration Chairman Debbie Matz announced plans for "modernizing and revitalizing'' the agency in areas such as examinations and allowing more innovative products and services.
"We're modernizing and revitalizing NCUA for an industry that is newly vibrant, increasingly complex and rapidly changing," Matz said at Monday's session of the Credit Union National Association's Governmental Affairs Conference. "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."
She noted that the agency has streamlined examinations for smaller credit unions and
NCUA Chairman Matz unveils a major initiative at the CUNA GAC, telling her credit union audience that they will see a "new" NCUA--modernized and revitalized. (CUNA Photo)
created an Office of National Examinations and Supervision to improve the way it supervises larger credit unions. In addition, the agency plans to continue its efforts to provide more consistency in the examination process.
Matz, who was named chairman by President Obama in 2009, said the agency needs to be especially vigilant, even though the financial crisis is over. She said the industry faces several key challenges, including:
Interest-rate risk from long-term, fixed-rate loans;
New technologies like mobile banking; and
Concentration of assets in the largest credit unions.
She reminded attendees that in the past year the agency had made key changes, supported by CUNA, such as fixing the rules on Troubled Debt Restructuring, streamlining the rules for Low Income Credit Union designation and raising the threshold for small credit unions from $10 million in assets to $50 million in assets.
"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."
Matz noted that the industry is financially strong and said that return on average assets is 86 basis points, up from 18 basis points in 2009. Net worth is 10.4%. Loans have grown for seven consecutive quarters and charge-offs have fallen for four consecutive quarters.
She added that the growth, combined with the added services that many credit unions offer, has forced the agency to deal with new kinds of risks.
"Some risks are always there. Others arise with new realities. But either way, being the best of a time that's passed is not good enough,'' she noted.
Matz compared the challenge that forced the NCUA to modernize with challenges facing auto manufacturers in trying to modernize cars, such as the 1965 Aston Martin featured in many James Bond films. That car didn't have seatbelts, air bags and anti-lock brakes.
She noted that "just plain cool as those cars were, you probably wouldn't choose to buy a car without those safety features today.'' And added that the "rules of the road that guided your credit unions in earlier decades may not meet your needs or your members' needs today."