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PALM SPRINGS, Calif.-NCUA Board Member Debbie Matz recently outlined five areas of concern she had for credit unions looking into the future and shared initiatives that some state credit union leagues are launching to counter them. “Leagues can take the lead in guiding credit unions around these potential obstacles, ” Matz stated during the Winter Meeting of the American Association of Credit Union Leagues. “ My concerns are all related issues which, taken together, can threaten the future of the credit union movement,” she said. “Slow membership growth could lead to the disappearance of small credit unions. Reputation risks, along with the disappearance of small credit unions, could lead to taxation. And taxation could lead to more conversions to mutual savings banks.” However, overall, Matz was optimistic about the future for credit unions. Despite the threats facing credit unions, she concluded, “I am optimistic about credit unions’ future. Keep sharing your best practices with each other. Together, you can overcome all of these concerns and lead credit unions to an even brighter future.” Matz advocated that the leagues should be encouraging credit unions to reach out to the unbanked with a focus on those from cultures unfamiliar to credit unions. She noted that the Pennsylvania Credit Union Association has started a program to help credit unions providing check-cashing services for non-members. Matz added that the Texas league is working with Mexican consulates and the International Remittance Network (IRnet) to help credit unions reach more Latinos. The leagues should also facilitate partnerships to aid small credit unions and avoid their disappearance. “Leagues can facilitate partnerships that help small credit unions get needed training and offer services that will attract more members,” she told the attendees. Matz cited the Idaho league for matching up small credit union officials with sponsors for training purposes. The Credit Union Association of Oregon provides a full range of services to community development credit unions even if they cannot afford to pay their full share of league dues. Additionally, the leagues should be educating credit unions on the reputation risks they take with certain programs like indirect lending, among other things, according to Matz. “Credit unions must be careful before offering indirect lending or bounce protection programs through third parties which charge very high fees,” she warned. The NCUA Board member noted that the Colorado league offers seminars warning of the pitfalls to avoid in indirect lending and the Michigan league advises credit unions to make bounce protection more consumer-friendly by tying programs to financial counseling or overdraft loans. Taxation was another concern of Matz’. “Lawmakers want to know what credit unions are doing to help their constituents who are not being served by other insured financial institutions,” she advised. She urged the leagues to “continue working with state and federal government officials to demonstrate credit unions’ commitment to serving people of modest means.” At the state level, the Wisconsin league is beginning a partnership with the State Department of Revenue to prevent un-banked tax filers from being ripped off by predatory lenders. Finally, Matz imparted that she is “concerned that credit unions have been converting (to banks) for reasons that may not be in members’ best interest.” “Leagues are in a position to give members more information than our regulation can require – and more than a converting credit union is likely to disclose,” she said. Matz noted that during the Lake Michigan Credit Union failed conversion attempt, the Michigan league launched a multi-faceted, public information campaign to educate credit union members. [email protected]

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