ALEXANDRIA, Va.-NCUA Board Member Deborah Matz continued her support of small credit union issues by announcing an internal working group she established for addressing the specific issues of small credit unions. "Small credit unions, those under $10 million, are the icons of the credit union movement; they are what many people think of when they think of credit unions. They also represent over 50% of all federally insured credit unions. However, they face unique challenges," Matz said. She pointed out that small credit unions are continuing to disappear at an accelerating rate. Ninety small credit unions were lost in the first quarter of 2003 as opposed to 312 for all of 2002. Matz explained that the working group will "look at all of our functions and see if they impact small credit unions positively or negatively or not at all." Though she emphasized that the group is still very much in the formative stages, she said that regulations, operations, communications, and examinations are all within its purview. The group held its first meeting by videoconference May 6, with more planned but no dates are set. Matz said the idea for the group fermented in her mind from discussions during NCUA's Strategic Leadership Summit in January where a panel of small credit union CEOs expressed concerns about some of NCUA's internal workings that are particularly burdensome to them. Specifically, she said, they mentioned the amount of paperwork that comes in from the agency and the manner in which it is presented. She added that obviously some things cannot be changed for safety and soundness reasons but that the group would help to identify those items that can be modified. With Office of Credit Union Development Director Anthony LaCreta at the helm, it should "work hand-in-hand" with the Small Credit Union Program, Matz said. The working group will not focus on the credit unions themselves, but rather inward on NCUA as well as the SCUP, she stressed. "We are going to be analyzing our role and make sure we aren't doing anything to make them less competitive," Matz explained. Other members of the working group include: Dan Gordon from the Office of Strategic Program Support and Planning; Kim Iverson of the Office of Examination and Insurance; Nick Sanimarco of Region I; Adrienne Munroe from Region II; Charles Brandon from Region III; Carl Banks from Region V; John Dock, Region VI; Nancy Padilla with Office of Credit Union Development; and George Curtis from NCUA's Office of Corporate Credit Unions. The group will also explore strategies to help small credit unions compete and outline the proper role for NCUA, Matz said. "NCUA's Small Credit Union Program already provides assistance to many small credit unions," she commented. "But the full range of possibilities will be examined in a systematic manner to identify potential relationships and activities that are both practical and beneficial to small credit unions." The SCUP provided $300,000 in grants for hardware and software last year, which Matz said "is a big step toward competitiveness." In many cases, she said, small credit unions close up shop because of lagging technology to meet their members' service needs and attract new membership. "Yet, in some communities," according to Matz, "they are the only insured depository institution and play distinctive roles in combating predatory lending, offering basic services to the unbanked population and providing financial education to their membership." In addition to SCUP funds, NCUA has requested an additional $1 million for the Community Development Revolving Loan Fund over last year's appropriation, which would bring the total congressional appropriation to $2 million. A portion of the CDRLF is earmarked for technology grants, while the remainder goes to low interest loans. Matz said these funds would also be helpful to enhance small credit unions' competitiveness. Routine changes in the financial services landscape, like the increasing usage of electronic transactions and expansive community field of membership approvals, have a particularly hard impact on small credit unions, Matz pointed out. "The working group will attempt to identify such factors and look for ways to prevent or mitigate adverse consequences for small credit unions," she said. Ultimately, Matz plans for the group to develop recommendations to be considered by NCUA and the credit union community. -

[email protected]