WASHINGTON–Will there be a repeat nationally of what has been seen in California following the disclosure of overdraft/NSF income by state-chartered credit unions, where there has been considerable media and public scrutiny, and now a congressional investigation?
That’s the big concern of America’s Credit Unions now that effective with 2024 call reports credit unions of more than $1 billion in assets are required to provide data on their overdraft/NSF income.
State-chartered credit unions in the Golden State were required to report their overdraft/NSF revenue beginning in 2023.
“There’s still a concern for us relative to reputation risk, so we’re seeing if we can get NCUA, at a minimum, to delay any public release of that information until some more analysis can be done,” said America’s Credit Unions’ chief advocacy officer, Carrie Hunt.
Judging credit unions based on just OD/NSF revenue ignores the “positive message” to be found in the “totality” of the value credit unions deliver to members, Hunt said, because it doesn’t take into consideration the “different types of programs and services that credit unions provide.”
What’s Being Overlooked
Such reporting, said Hunt, overlooks the fees credit unions refund, alternative products that are available, and specialized loans that members can use to address financial needs.
“It's extremely frustrating for credit unions to see that and to feel this pressure on the regulatory side,” Hunt said.
In response to a question from CUToday.info during a media call, Hunt acknowledged what has occurred and is occurring in California following release of NSF/OD data for state charters will only be magnified when NCUA releases its data collection.
“Our biggest fear is that just because of the number of credit unions reporting, even if the information is not surprising and is consistent with what we've seen from credit unions relative to moderate fees when compared to the banks, it will just simply be a talking point put out in the general and in social media,” said Hunt. It will just be fodder for the enemies of credit unions to continually push back and remove that as an option.”
Especially Painful
The loss of the ability to overdraft their accounts will be especially painful in underserved and rural markets because there are no easy alternatives, according to Hunt.
“It would be a disservice to consumers,” she said. “So, if you were to ask me my biggest fear. it's just that there will be pressure to eliminate overdraft completely and it will have a negative impact on credit union members.”
Information Being Collected
Hunt said America’s Credit Unions has asked those CUs that are collecting the OD/NSF income on their second quarter 5300s to also collect other data about the value they provide to members.
“But I don't think the answer to this is reporting data,” Hunt said. “I think we have to go back to the law. Credit unions and other financial institutions, of course, are lawfully allowed to engage in these programs. It is fully disclosed and credit unions in particular constantly monitor their programs to make sure there isn't overuse.
‘It’s Not Going to Help Consumers’
“Even if you look at the reports that the CFPB produces, it is still a small percentage of consumers who are frequent users,” Hunt continued. “I appreciate the spin that the CFPB has put on this, but they're searching for a problem that doesn't exist. In fact, if they're going to completely eliminate overdraft it is only going to help big banks and it is not going to help some consumers who really need and want this.”
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