NCUA Chairman Matz Affirms Support for CDCI, CDCU Supervisory Letter - National Federation of Community Development Credit Unions

(June 16, 2010, New York, NY) Two top concerns of the community development credit union movement received strong support from NCUA Chairman Debbie Matz in her remarks at the 36th Annual Conference on Serving the Underserved in Pittsburgh, PA, presented by the National Federation of Community Development Credit Unions (Federation).

NCUA Board Chairman Debbie Matz during her keynote address at the Federation's 36th Annual Conference on Serving the Underserved.

The Community Development Capital Initiative (CDCI), the Treasury Department’s program to invest in financially sound CDCUs that are certified by the CDFI Fund, has received 111 applications, Ms. Matz reported. Announced in February by Treasury Secretary Timothy Geithner, the CDCI program will make secondary-capital investments of up to 3.5% of assets in eligible low-income credit unions. Applicants are currently being reviewed for financial soundness by NCUA. Ms Matz assured conference attendees that “no credit union’s application for CDCI will be denied by NCUA staff without [my] concurrence.”

“We are very pleased to hear Chairman Matz restate her commitment to personally review all CDCI applications before final decisions are made,” explained Federation Governmental Affairs Committee Chairman Deyanira Del Río, board president of the Lower East Side Peoples FCU, the largest CDCU in New York City. “We feel confident that Ms. Matz’s commitment to this program will allow as many credit unions as possible to make their case and fulfill the President’s intent to strengthen community-based financial institutions serving the nation’s hardest-hit communities.”

Ms. Matz pointed out that the agency’s board and senior staff had worked through the blizzards in the Capitol early this year to revise the regulations and procedures necessary to make the CDCI work. Federation President/CEO Cliff Rosenthal praised NCUA for its extraordinary flexibility and responsiveness: “I want to personally thank Chairman Matz and her staff at NCUA for working closely with the Federation under tight deadlines to address critical issues in the CDCI program,” he said. “Her assistance has been crucial. By September 30, we are hoping that as many as 100 credit unions will receive a total of more than $100 million in secondary capital.”

NCUA Letter 10-CU-01: Supervising Low-Income Credit Unions and Community Development Credit Unions

Both Ms. Matz and Board Member Hyland, who opened the 6th Latino Credit Union Conference two days earlier, touched on NCUA Supervisory Letter 10-CU-01: Supervising Low-Income Credit Unions and Community Development Credit Unions, which drew upon dialogue between NCUA, CDCUs, and Federation leadership. The letter, in Ms. Matz’s words, “emphasizes that CDCUs and LICUs have unique characteristics and challenges that are very different from those of most larger credit unions” she explained. … [and] reminds examiners that they should take that fact into account when evaluating loan portfolios, funding sources and operating costs.” At the same time, she also stressed that examiners’ primary responsibility is promoting viable and sustainable credit union service to their members. “The letter does not mean that we are easing regulatory scrutiny or providing any special exclusion to the rules,” she said. “Every credit union must live up to all the fundamental criteria that ensure the safety and soundness of its operations.”

NCUA Board Member Gigi Hyland addressing the Federation's and NLCUP's 6th Latino CU Conference

NCUA Board Member Gigi Hyland addresses the Federation's and NLCUP's 6th Latino Credit Union Conference in Pittsburgh, PA.

“We welcome the priority NCUA’s leadership has given to this, and the training and instruction they have given to examiners,” Rosenthal said. “However, we continue to see a gap between board-level policy and the interactions between examiners and CDCUs. To address this disparity, we will be surveying our membership to determine the impact of the letter, and plan to share our findings with NCUA’s board.”

A strong advocate for credit union service to low-income and underserved communities during her previous term on NCUA’s Board from 2002 - 2005, Chairman Matz reiterated her support for the CDCU mission. “Thanks to the hard work of CDCUs, thousands of low- and middle-income families are enjoying expanded access to the services they need and the credit they deserve,” Matz said. “The spirit of inclusion that defines your work is particularly important as we move from recession to recovery… [and] by focusing on the underserved, CDCUs provide more than just hands-on help: You provide renewed hope and you reassure lower-income families that they can accomplish their dreams.”

More than 300 representatives of credit unions, government, and asset-building professionals attended the Federation’s event, which began on June 9 with the 6th Latino Credit Union Conference, co-sponsored by the Federation and the Network of Latino Credit Unions and Professionals (NLCUP). A large delegation from Mexico attended, as did a representative of a credit union in Senegal.

Senior officials of the Small Business Administration (SBA) and the U.S. Department of Agriculture (USDA) were among the featured speakers. “The Federation is eager to help more CDCUs become participants in the lending programs of these two agencies,” said Rosenthal. An outcome from an address by USDA Deputy Administrator for Cooperative Programss LeAnn Oliver was the Federation’s formation of a rural credit union task force, to be chaired by Marcus Bordelon, CEO of Appalachian FCU (Berea, KY), who was honored with the Federation’s 2010 Annie Vamper “Helping Hands” Award, the highest honor given out by the Federation.