WASHINGTON–While it may engender strong pushback, NAFCU’s Carrie Hunt said credit unions need to give some thought to what’s happening in the world of litigation.
Hunt, NAFCU’s EVP-government affairs and general counsel with NAFCU, told the trade group’s Congressional Caucus here that “more and more I have seen how litigation is having an impact on credit unions really from a standpoint of having to deal with frivolous lawsuit and data breaches. Indeed, when Hunt asked the audience how many have had to deal with a big hit around breach-related costs, about half the hands in the audience raised.
“Because we don’t have standards in place we are left to turning to the courts to try to recoup some of the money related to data breaches,” said Hunt. “It’s funny; anytime you have a class action lawsuit, typically anyone who recovers gets pennies on the dollar. But the benefits to class action litigation is that not every credit union has to expend money to try to recoup costs. NAFCU tracks all of those lawsuits; Home Depot and Target have settled for the most part. Wendy’s, we expect to settle, as well, and we expect these to be even more favorable than were the Home Depot and Target settlements.”
In a different area of litigation, Hunt pointed to the ongoing lawsuits in which NCUA is involved with various Wall Street firms as it seeks to recover funds related to losses from mortgage-backed securities sold by those banks. Hunt said NAFCU frequently hears from credit unions wanting to know when they will start seeing some of those recoveries.
“NCUA has said it can’t return money to credit unions until borrowings to Treasury are repaid and NGNs are paid,” said Hunt. “That’s all fine and good. We think NCUA needs to be a little more transparent about who is making those decisions about who is getting paid when. What happens if we get to 2021 and NCUA decides to re-securitize? What if a different board is in place? We want to know where are we going from here. We want to make sure credit unions are protected, as well.”
In terms of the lawsuit filed against NCUA recently by the Independent Community Bankers of America over the agency’s business lending rule, Hunt called it just more “rhetoric” from the bankers.
“At the end I think credit unions will be stronger, and that NCUA will move forward with its field of membership rule,” said Hunt. “I do think that even without this ICBA lawsuit NCUA is taking its time to making sure whatever (FOM) rule they come up with is ironclad in terms of not being sued, but I think the bankers are going to sue nonetheless.”