A recent letter from a third-party vendor mischaracterized my position on indirect lending and NCUA's role in supervising that activity at credit unions [CU Times, Nov. 4, page 16]. I agree that there are significant and tangible benefits that indirect lending programs can provide to credit unions and their members, and I do not want to unnecessarily burden or inhibit credit union service offerings. This is especially true during these difficult economic times, when credit unions are working to maintain robust lending efforts while other types of financial institutions have curtailed consumer lending. However, with credit unions absorbing higher loan losses during these difficult times, I am committed to more comprehensive supervision of all aspects of lending-particularly fixed-rate mortgage lending, business lending, indirect lending and loan participations. These areas of risk have come to light in balance sheet trends that the NCUA is seeing throughout the industry. The NCUA is taking every appropriate step to improve supervision in these areas. This requires not only greater scrutiny on the part of the NCUA but also expanded due diligence on the part of credit unions. Due diligence is especially important when credit unions utilize third parties between their institutions and members. The NCUA's experience has shown that credit unions need to drive their own indirect lending relationships not simply outsource their loan decisions to auto dealers or any third parties. To protect themselves as well as their members, credit unions need to be doing their own due diligence, pulling credit reports and practicing sound underwriting. If it's done properly, indirect lending is a fine way to grow business. But in too many cases where it was not done properly, indirect lending has steered credit unions into insolvency. That was unacceptable. My job is to make sure that it's unrepeatable. Debbie Matz Chairman NCUA Alexandria, Va.