NCUA Chair Nomination Appears to Violate the Law

On May 21, 2009, the White House announced the nomination of Deborah Matz to the NCUA Board and designated her to serve as the chair of the NCUA Board. If the Senate confirms Ms. Matz’s nomination, this would mean that two of the three Board positions on the NCUA Board will be held by individuals who at the time of their appointment were officers or had recently been officers in a credit union. This appears to violate the Federal Credit Union Act.

In 1998, Congress expressly limited the appointment of credit union officials to the NCUA Board. Section 205 of the Credit Union Membership Access Act (12 U.S.C.102(b)(2)(B)) states “[n]ot more than one member of the Board may be appointed to the Board from among individuals who, at the time of the appointment, are, or have recently been, involved with any insured credit union as a committee member, director, officer, employee, or other institution-affiliated party.”

The goal of this provision is pretty clear – to limit the influence credit unions exercised over their regulator, the National Credit Union Administration.

After leaving the NCUA Board in 2005, Deborah Matz served as the Executive Vice President and Chief Operating Officer of the $800 million Andrews Federal Credit Union located in Suitland, Maryland until June 2008.

Gigi Hyland’s term on the NCUA Board began on November 18, 2005. Prior to joining the NCUA Board, she served as Senior Vice President, General Counsel for Empire Corporate Federal Credit Union in Albany, New York from 2003-2005. From 1997-2002, she served concurrently as Vice President, Corporate Credit Union Relations of the Credit Union National Association, Inc. and Executive Director for the Association of Corporate Credit Unions.

The question regarding the Matz appointment is whether a June 2008 separation from the credit union constitutes recently been involved with an insured credit union.

Given the financial difficulties facing the credit union industry, the independence of the NCUA Board is very important. Having two of the three NCUA Board members from the credit union industry may result in the agency being captured by the credit union industry.

The last thing the credit union industry needs now is a cheerleader regulator.