Printer Friendly

Matz faces range of challenges following Senate confirmation.

Following Senate confirmation by unanimous consent In parliamentary procedure, unanimous consent, also known as general consent, is a situation in which no one present objects. The chair may state, for instance: "If there is no objection, the motion will be adopted. [pause] Since there is no objection, the motion is adopted. , Deborah Matz faces a large and complicated list of challenges as chair of the NOUA at a critical time for the credit union movement.

Matz, who was appointed by President Obama in May and confirmed on Aug. 5, hadn't been sworn in as of press time but was likely to take office before the end of the month, according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 several sources.


Once she begins work, she'll have to guide the agency toward its next steps in dealing with the effects of the recession on natural person and corporate credit unions that has put a strain on the NCUSIF NCUSIF National Credit Union Share Insurance Fund . In addition, the agency is working on its plan for revamping the structure of the corporate credit union system. Also, the industry is shrinking as a result of the mergers of some credit unions and the failure of others.

The asset losses-caused by the shrinking economy as well as the premiums paid to the NCUSIF as a result of the need to rescue the corporate credit unions-will affect the NCUA's actions in several of these areas.

When asked what Matz's biggest challenge is, long-time financial service industry analyst Bert Ely replied, "The survival of the credit union movement."

The structure of corporate credit unions, which the board will address in a rule change that is working its way through the agency has drawn considerable interest.

The agency received approximately 500 comment letters. During her confirmation hearing last monthher only public comment since being appointed-Matz didn't shed much light on her views about the corporates. She noted, however, that she voted against the 2002 corporate credit union regulations while on the board because they didn't adequately address her concerns about limiting concentration of risk.

Current NCUA NCUA National Credit Union Administration (US government)
NCUA Nbcs Control Unit Atm
 Chairman Michael E. Fryzel, who will remain on the board as a member once Matz is sworn in, told a House subcommittee in May that he will push for stronger risk-management tools as part of an overhaul.

He said he favored a mandated 5% core capital leverage ratio (including a certain percentage of retained earnings Retained Earnings

The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet.
) for corporate credit unions to be considered well-capitalized. He added that the NCUA requires a "significant amount" of a corporate's core capital consist of retained earnings. The rule will also include risk-weighted capital standards and require that all capital instruments qualify as Tier 1 or Tier 2 capital Tier 2 Capital

A term used to describe the capital adequacy of a bank. Tier II capital is secondary bank capital that includes items such as undisclosed reserves, general loss reserves, subordinated term debt, and more.

This is related to Tier 1 Capital.

Bethpage Federal Credit Union President/CEO Kirk Kordeleski said he hopes under Matz, the agency will be more transparent about the health of the corporates so that credit unions can do more effective planning.

"Until we know more about the corporates, including the assumptions made in the Clayton and Pimco models, it will be difficult to get the full picture. The costs to natural persons are a drain on how we operate this year and how we plan for what we can and can't do in 2010 and 2011."

Another large issue that the agency will likely deal with is supplemental capital.

NCUA Board Member Gigi Hyland has been the point person on this issue and has been working with the credit union trade associations and other stakeholders Stakeholders

All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government.
 to come up with a proposal. Several sources at the agency said the board could take up the issue this fall.

So far, there hasn't been consensus, though last year CUNA Cuna

Chibchan-speaking Indian people who once occupied the central region of what is now Panama and the neighbouring San Blas Islands and who still survive in marginal areas. In the 16th century they lived in federated villages under chiefs who wielded considerable power.
 and NAFCU NAFCU National Association of Federal Credit Unions
NAFCU Northland Area Federal Credit Union
 issued a joint statement. The trade groups reiterated their past support for risk-based capital standards that include "reasonable leverage ratios," identical to the rules of the banking system. Ely said because credit unions can't raise capital, those that have been hurt by the economy have limited options and merging weaker ones into stronger ones is not a panacea.

"Many of the better capitalized credit unions still aren't well off, and so if the weaker credit unions can't find a merger partner, they may have to think about converting to a mutual savings bank Mutual savings bank

A state-chartered savings bank which is owned by its depositors and managed by a fiduciary board of trustees.
. And that's not good for the credit union movement," he said.

Whatever challenges the agency faces, Matz will be able to look at them through the eyes of both a regulator and a former credit union executive, having served as executive vice president/chief operating officer of Andrews Federal Credit Union.

Kordeleski said that combination of experience could result in better decisions by the agency.

"She will be keenly aware how the board's actions affect individual credit unions and the business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets  of credit unions," he said.

Before joining the NCUA Board, she worked on Capitol Hill and as a senior appointee APPOINTEE. A person who is appointed or selected for a particular purpose; as the appointee under a power, is the person who is to receive the benefit of the trust or power.  in the U.S. Department of Agriculture during the Clinton administration Noun 1. Clinton administration - the executive under President Clinton
executive - persons who administer the law

She will take the board seat currently held by Rodney Hood and succeed Fryzel as chairman. Fryzel, who has been chairman since joining the board July 29, 2008, will remain on the board as a regular member until his term expires on Aug. 2, 2013.

Hyland, a Democrat who was appointed by President Bush, is serving a term that expires Aug. 2, 2011.

COPYRIGHT 2009 Summit Business Media
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

 Reader Opinion




Article Details
Printer friendly Cite/link Email Feedback
Author:Marx, Claude R.
Publication:Credit Union Times
Date:Aug 19, 2009
Previous Article:Credit Union of Colorado.
Next Article:Experts, CEOs say exec compensation measure not likely to have huge impact.

Related Articles
Matz faces range of challenges after taking the helm of the NCUA.
Matz may face hurdle.
Matz to get her day on Capitol Hill.
Matz receives quick and friendly treatment at confirmation hearing.
NAFCU features regulators and lawmakers.
Matz, Candon tell lawmakers CUs face more rough times.
NCUA won't hold budget forum.
Southeast Corporate will eliminate retained deficit in step with NCUA.
Matz had active four months.

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters