I was very disappointed to read the negative comments regarding indirect lending made by NCUA Chairman Debbie Matz in her speech at the town hall meeting in San Diego [CU Times, Oct. 14]. I believe that these sorts of remarks reflect a bias against indirect lending that leads to a disproportionately negative focus by NCUA examiners. What is even worse, publicity about such remarks and reports of arbitrary or even irrational examinations of indirect lending activity leads many credit union executives, whose credit unions could benefit greatly by well-run indirect programs, to decline even considering implementing one. This in turn negatively impacts the strength of credit unions overall and is likely to impede the recovery of the automobile industry.

It's true that some credit unions should probably not attempt indirect lending. An extraordinary commitment of resources is required for a credit union with less than $50 million in assets to be successful. However, for larger credit unions, the benefits of indirect lending far outweigh the risks. In fact, the evidence shows that a well-run indirect program is nearly always associated with, if not necessary for, a well-capitalized, profitable and effectively managed credit union. Since it is practically indisputable that, in the vast majority of cases, the decision about financing the purchase of a new or used automobile is made at the dealership, the failure of a credit union to offer indirect lending is not only a disservice to members but practically removes the credit union from the auto lending marketplace.

Matz and all NCUA executives should be more circumspect in their remarks so as not to unnecessarily alarm credit union executives or NCUA staff regarding the risks of engaging in responsible indirect lending.