WASHINGTON — In a 23-minute hearing that was part love fest andpart survey of the challenges facing the credit union movement,Deborah Matz, NCUA chair-nominee, promised lawmakers she'd take abalanced approach to regulating credit unions.

She told members of the Senate Banking Committee last Wednesdaythat she would work to ensure that the agency's rules contain“appropriate safeguards and sufficient opportunities for creditunions to thrive.” But she added that the agency's upcomingrevision to its corporate credit union regulations would be tougherthan the last rules enacted in 2002, which she voted against duringher previous tenure on the board.

Matz said those rules were problematic because “the investmentauthority being granted was overly broad and permissive,particularly in light of the complexity of the financialinstruments that were available to the corporates.”

She addressed the issue of the corporates both in her openingstatement and in response to a question from Sen. Richard Shelby(R-Ala.), the panel's senior Republican, who talked about the needto restructure the corporate credit union system withoutconcentrating so much risk.

The questioning from Shelby and Acting Chairman Tim Johnson(D-S.D.), the only two senators at the hearing, wasnonconfrontational. Both men praised Matz-Johnson called her “veryqualified” and Shelby called her “highly qualified. Johnson alsoread from a 2005 Credit Union Times editorial lauding heraccomplishments while on the NCUA Board from 2002-2005.

Johnson called the New York City native an “honorary SouthDakotan,” because of her professional and personal ties to thestate, stemming in part from her friendship with former SenateMajority Leader Tom Daschle (D-S.D.).

Matz also has ties to the state because her husband,lawyer-lobbyist Marshall Matz, works on behalf of Native Americantribes and was a public interest lawyer in the state during the1970s. He contributed $500 to Johnson's re-election campaign lastyear.

Marshall Matz sat behind his wife at the hearing, as did theirdaughter, Hayley.

In attempting to appeal to both Johnson and Shelby, who havedifferent views on regulatory issues, Matz took a nuanced view ofthe Obama administration's proposal to create a new agency toregulate consumer financial products.

When responding to a question from Johnson, she endorsed theObama administration's proposal for a new agency and said it isneeded to centralize and streamline regulation. She added that theNCUA does a “great job” regulating financial products that creditunions sell to consumers.

But in response to a question from Shelby, who noted that creditunions are already designed to serve the needs of their members,she said she “would not object” if credit unions are exempt fromthe purview of the agency. She added that if credit unions areregulated by the new agency, which the Obama administration isproposing be called the Consumer Financial Protection Agency, theyshould have a representative on its board.

Matz also promised that if she is returned to the NCUA Board,she would have the agency do even more to help credit unionspromote financial education and reach out to as many consumers aspossible.

Johnson asked her what the NCUA can do to give low-incomeconsumers access to short-term credit without getting them trappedin a cycle of debt.

Matz replied that when she was on the NCUA Board, she initiatedPartnering and Leadership Success, which taught credit unions howto provide alternatives to payday lending, and when she was thechief operating officer at Andrews Federal Credit Union, itinstituted a “Cash to Go” program to provide low-interestloans.

She said she will stress to credit unions that these kinds ofprogram must be done carefully and may take a while to make aprofit.

Matz was nominated by President Obama in May to be the NCUAChair. If confirmed, she would succeed NCUA Chairman Michael E.Fryzel, who will remain on the board as a member. She would takethe board seat currently held by NCUA Vice Chairman Rodney Hood,whose term expired in April but has stayed on the board pending thearrival of a successor.

In addition to her work at Andrews FCU and on the NCUA Board,Matz was a senior executive at the U.S. Department of Agricultureand a staff economist for Congress' Joint Economic Committee.
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