GRAND RAPIDS, Mich.–How many more employees is NCUA going to have to hire?, one trade group is asking Congress.
With legislation that would give NCUA oversight authority over third party vendors, including CUSOs, considered earlier this week during a House subcommittee hearing, the National Association of CUSOs (NACUSOs) has sent a letter to Congress expressing its “concerns” over a variety of issues.
The legislation was considered by the Subcommittee on Consumer Protection and Financial Institutions during the hearing titled "The Future of Banking: How Consolidation, Nonbank Competition and Technology are Reshaping the Banking System."
In its letter, NACUSO told the House Financial Services Committee that NCUA Chairman Todd Harper has been asking the agency be granted expanded powers or “vendor authority” to oversee third party vendors.
“This unprecedented expansion of the agency’s authority is of concern to CUSOs because of the potential impact upon the collaborative model we represent among credit unions that have chosen the CUSO structure to share the risk associated with costly innovation and to enhance the delivery of credit union services to more members from all walks of life,” wrote NACUSO. “In our view, NCUA lacks the expertise to regulate and examine any and all businesses that interact with credit unions.”
‘Unnecessary Increase’
NACUSO told Congress the necessary investment of agency resources to hire or contract with the “broad level of expertise required to examine every technology service, communications contractor, statement processor, ATM servicer, check provider, building construction company, accounting firm, advertising agency, insurance agency, broker/dealer, lawn care company, etc. that enters into a contract with a credit union will bring about a dramatic and unnecessary increase in the size, budget and staffing of this federal agency.”
The average number of vendors for a single credit union can easily exceed 100, 200 in the case of some larger credit unions, NACUSO added.
“How many new NCUA employees will be needed to review these thousands of credit union vendors doing business with over five thousand credit unions nationwide?” NACUSO asked. “It should be noted that, while the number of full-time employees of the FDIC has decreased in response to the shrinking number of banks, the number of full-time employees of NCUA has increased, even as the number of federally insured credit unions have decreased from 10,316 to 5,099 over the past twenty years.”
NACUSO said NCUA already has the regulatory and supervisory authority it needs to oversee third parties.
Have a Problem?
“If NCUA has a problem with a risk posed by a CUSO, it has the power to compel changes through the CUSO’s owner credit unions,” NACUSO stated. “While NCUA has complained about the indirect nature of this authority, there is no contention that has or can be made that it is not effective. CUSO losses to credit unions since 2013 are virtually non-existent. There is no reason to extend statutory authority that could go far beyond what is currently required to protect the safety and soundness of credit unions and to essentially turn NCUA into a de facto Federal Trade Commission of the credit union industry.”
The letter was signed by NACUSO President/CEO Jack Antonini.