WASHINGTON–At least one trade group is being cautious over the prospects of a draft bill being circulated on Capitol Hill that would give NCUA oversight over third-party vendors and CUSOs.
As CUToday.info was first to report here, the draft legislation is being circulated in the House Financial Services committee, sources have told CUToday.info. The bill would seek to modify the Federal Credit Union Act as currently written to give NCUA an authority it has long sought, which is the ability to oversee all of the various vendors that provide services to credit unions.
NCUA has said it is particularly concerned with risks to credit unions from cyber-breaches by third parties that would put member data and perhaps a credit union itself at risk. All three NCUA board members have expressed support for such authority.
“The committee has been looking at the legislation, and we have raised objections to it,” confirmed Brad Thaler, VP-legislative affairs with NAFCU. “(The committee) is not scheduled to move the legislation yet. They recognize there is some pushback on it, and it doesn’t have broad support. We really question whether NCUA has truly made the case for why they need this authority and how it will be different from using the powers they already have without being a significant cost to credit unions. They have provided no numbers or details.”
“Leery’ Over CFPB Announcement
Meanwhile, NAFCU is also “leery” over an announcement last week by the Consumer Financial Protection Bureau, NCUA and several other government agencies that they are returning to “enforcement of critical protections for families and homeowners.”
Those protections, put in place in the wake of the Great Recession to prevent another foreclosure crisis, “give families the chance to find alternatives to foreclosure before losing their home,” the agencies said.
The joint statement further noted that with the majority of the more than one-million remaining COVID-19 forbearances expected to end before the end of the year, struggling homeowners will need these protections to avoid foreclosure.
“We are always leery of regulators regulating by enforcement rather than regulation,” said Thaler. “Credit unions want to follow the rules and it’s important there are clear rules of the road for credit unions to follow. If you look at the whole financial services space there are bad actors out there. But we are leery that you don’t over-enforce on gray areas when a financial institution is trying to do the right thing because the law is unclear.”