Matz Urges Credit Unions to Change 3 Perceptions

Speech to NAFCU Offers Perspective on Large CUs, Business Loans and Tax Threats

July 25, 2003, Boston – Some lawmakers hold negative perceptions about credit unions, and it’s time to change them, urges NCUA Board Member Debbie Matz.

Perception #1: Large credit unions are just like banks.
Perception #2: Credit unions have no business making business loans.
Perception #3: Credit union taxation is only a threat to large state charters.

“ You and I know these perceptions are outdated and inaccurate,” Matz told 2,200 credit union officials at the National Association of Federal Credit Unions (NAFCU) Annual Conference. “But your competitors are working very diligently – and I might add, very effectively – to convince lawmakers that these perceptions are reality.”
Matz called on credit union staff and volunteers to “educate your lawmakers and the public in order to change these perceptions. The future of the credit union community depends on it.”

Matz offered key points credit unions can make in changing these perceptions:

“ First of all, no credit union – large or small – is structured like a bank. The member-owned, not-for-profit structure remains a key difference between credit unions and banks.”

Still, Matz acknowledged, “the structure alone is not enough” to change the perception about large credit unions. She suggested that more large credit unions publicize special services such as financial education, Individual Development Accounts (IDAs), Latino outreach and community partnerships.

Addressing member business loans (MBL), Matz explained why she started NCUA’s effort to improve the federal MBL regulation. “These are loans that banks generally won’t make – not because they are too risky, but because they are too small.” Credit unions’ average business loan is less than $120,000. Delinquencies on credit union business loans are just as low as delinquencies on all other credit union loans.

“ These facts should help change the perception of credit union business loans,” Matz pointed out. “While it’s not for every credit union, 1,500 credit unions have proven that member business lending is good for business.”

On taxation, Matz emphasized, “No matter what state, what charter or what size – every credit union has a stake in the tax debate... If one or more states decide to tax credit unions, taxing federal credit unions may seem like a good idea to some Members of Congress. And if large credit unions are taxed, it will be only a matter of time before smaller credit unions are taxed.”

Each and every credit union can play a role to keep this from happening, Matz observed. “Educate your community leaders and your legislators. Tell them what your credit union does for your members and your communities. Remind them what makes credit unions different… Lawmakers want to hear what you’ve done to help constituents in their communities. If you provide your Members of Congress with homegrown examples, they won’t even think about taxing credit unions.”

For example, Matz suggested, tell them how you:

Matz invited credit unions to join her Partnering and Leadership Successes (PALS) initiative, designed for credit unions to share ideas on how to reach new members and expand services.

“ With all the new members whose lives you touch, you will go a long way toward changing those three perceptions about credit unions,” Matz concluded. “You will demonstrate the reality of your credit union’s role in your community.”

 

A 23-year public service veteran, Matz is a member of three credit unions and resides in McLean, Va. with her husband and two children. Before her appointment to the NCUA Board, Matz was appointed by President Clinton as Deputy Assistant Secretary for Administration in the Department of Agriculture.

The National Credit Union Administration, governed by a three-member board appointed by the President and confirmed by the Senate, is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the savings of more than 80 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions.

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