WASHINGTON—NAFCU has sent three letters to congressional committees on consumer privacy, data security, and CDFIs, respectively.
Ahead of the House Energy and Commerce subcommittee hearing on consumer privacy and data security, NAFCU sent a letter repeating the trade association’s call for a stronger national data security standard and to urge that negligent companies – rather than consumers or credit unions – be liable for losses.
The hearing, "Protecting Consumer Privacy in the Era of Big Data," was held by the Subcommittee on Digital Commerce and Consumer Protection Tuesday.
In his letter to Subcommittee Chairwoman Janice Schakowsky (D-IL) and Ranking Member Cathy McMorris Rodgers (R-WA), NAFCU Vice President of Legislative Affairs Brad Thaler wrote that other financial entities already subject to parts of the Gramm-Leach-Bliley Act (GLBA) should be subject to the same regulatory requirements as depository institutions.
Guiding Principles
Thaler also outlined guiding principles NAFCU and credit unions would like to see incorporated in data security legislation, primarily to ensure consumers are informed of what data is retained and how it's protected, timely disclosure of breaches, and that negligent entities are held responsible when a data breach occurs on their end.
“Under the GLBA, credit unions and other depository institutions are required to meet certain criteria for safekeeping consumers’ personal information and are held accountable if that criteria are not met through examination and penalties. Unfortunately, there is no comprehensive regulatory structure akin to the GLBA that covers other entities who collect and hold sensitive information.” Thaler wrote. “NAFCU strongly supports the passage of legislation requiring any entity responsible for the storage of consumer data to meet standards similar to those imposed on depository institutions under the GLBA.”
Letter on Credit Bureaus
Separately, ahead of a House Financial Services Committee hearing, NAFCU's Carrie Hunt sent a letter to the committee's leadership noting the importance of the nation's credit reporting system for credit unions and the need to address data security within the system in light of the 2017 Equifax data breach.
In the letter to Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC), Hunt noted that credit unions rely on this national credit system to assess lending risk, manage portfolios, detect fraud, acquire new members and grow those relationships…NAFCU and its member credit unions have long advocated for the use of alternative models that more accurately capture creditworthy borrowers and permit them to access affordable credit."
Hunt further noted the association is reviewing a recent draft bill released by Waters to reform the consumer credit reporting system and will be offering feedback on it, but said it is important that "any changes to the current system do not unintentionally burden credit unions."
Letter on CDFIs
In addition, Thaler also stressed the importance of grants provided to credit unions through the Community Development Financial Institutions (CDFI) Fund to better serve low-income members and underbanked communities in a letter ahead of a House Appropriations subcommittee hearing.
Thaler, NAFCU's vice president of legislative affairs, noted the important connection between credit unions and the CDFI program: there were 285 CDFI-designated credit unions as of Nov. 30, 2018, and those institutions held more than 50% of total CDFI assets. As a result, the NCUA and Treasury have introduced a streamlined CDFI application for credit unions to encourage more institutions to seek the designation.
"Over the past two years, CDFI credit unions received roughly $70 million in grant funding to aid in their efforts to offer financial services to their low- and moderate-income members," Thaler wrote. "Without the CDFI Fund grant program, many CDFI credit unions would not have been able offer new products and loans that provide financial stability for members and their families."
Congress Provides Funding
In addition to helping credit unions in low-income areas serve members in need, the CDFI Fund grant program gives credit unions access to funds that they are not able to raise from the capital markets, said Thaler, noting without these funds, "thousands of consumers could find themselves without credit union products, such as small dollar loans, credit builder programs, and access to financial education."
Congress recently funded the CDFI program with $250-million.