WASHINGTON–A discussion draft of legislation that would provide NCUA with third party oversight authority is being circulated in the House of Representative, CUToday.info has learned.
Such oversight has been a long-time priority of numerous members of the NCUA board, including its current three members. The agency argues other regulators have the authority and that the inability to oversee the many vendors, including CUSOs, to credit unions creates numerous vulnerabilities, most especially in data security.
The discussion draft, circulating under the title “The NCUA Oversight of Third Party Vendors Act,’ would authorize section 206A of the Federal Credit Union Act to provide the oversight authority it is seeking.
Such standalone bills, if they are to be passed, are often attached to larger pieces of legislation or spending bills.
‘Regulatory Blind Spot’
As CUToday.info reported here in early May, in response to questions from Sen. Pat Toomey (R-PA), NCUA Chairman Todd Harper wrote, “Most credit unions rely on vendors to conduct important parts of their operations. Yet, as credit unions respond to COVID-19 issues, they have little time to address problems that may arise with those vendors. Many also lack the resources required to fully conduct due diligence when adding new vendors to address COVID-19 needs.
“At present, the NCUA lacks the authority to supervise or oversee credit union third-party vendors, even though the Government Accountability Office and Financial Stability Oversight Council have long urged Congress to close this regulatory blind spot,” Harper continued. “I respectfully request that you provide the NCUA with this oversight authority now. In making this change, the NCUA would achieve parity with the federal banking agencies, which already have vendor oversight authority.”
The credit union trade associations have opposed the expanded powers for NCUA.