ARLINGTON, Va.–NAFCU is calling on NCUA to reset the National Credit Union Share Insurance Fund’s (NCUSIF) normal operating level (NOL) to 1.3% so CU may realize its fullest distribution. Separately, the trade group has also developed a new wite paper that outlines six principles to support its advocacy efforts data privacy.
In a comment letter to the agency, NAFCU Chief Economist and Vice President of Research Curt Long noted the most recent NCUSIF quarterly report showed the fund posted a net income of $24 million in the third quarter of 2019, with gains attributed to strong investment income earnings.
"While a distribution from the SIF in 2019 will depend on the performance of the fund over the second half of the year, as well as the NCUA Board's discretionary selection of the NOL, conditions for the fund have improved," wrote Long in a letter to the agency. "Insurance losses during the year have been minimal, and agency staff recently announced that it would begin to reverse the shortening of the investment portfolio duration which began in 2017, thus providing the opportunity for greater yield in the future."
The NCUSIF closed 2018 with an equity ratio of 1.39%, above the board-approved NOL of 1.38%.
Five-year Forecast
In the letter, Long goes on to discuss the future of the NOL and the agency's current five-year forecast. He also reiterated NAFCU's support of a strong NCUSIF and a NOL "which provides adequate protection to taxpayers and minimizes the potential for premium charges to credit unions."
"NAFCU also believes that the SIF should be managed proactively with a goal of identifying and quantifying salient risks," he added. "However, those goals must be balanced with the understanding that credit union resources are scarce."
Data Privacy White Paper
Separately, as state and national lawmakers consider new privacy legislation regarding consumers' data privacy, NAFCU has developed a new white paper that outlines six principles to support its advocacy efforts on the issue.
Through the white paper, NAFCU said it is emphasizing the need "for a comprehensive federal data privacy standard that protects consumers, harmonizes existing federal data privacy laws, and preempts state privacy laws."
The association further said it is encouraging Congress to adopt six principles to address these goals in any federal privacy legislation:
- A comprehensive national data security standard covering all entities that collect and store consumer information. NAFCU said it believes that financial institutions and non-financial institution entities – including fintech, retailers, and others that handle personal information – should be held to the same data privacy and security standards, which currently is not the case.
- Harmonization of existing federal laws and preemption of any state privacy law related to the privacy or security of personal information. “Without a federal standard in place, states have taken solutions into their own hands. However, NAFCU is concerned that the patchwork of privacy laws has created a confusing, burdensome environment,” the trade association said.
- Delegation of enforcement authority to the appropriate sectoral regulator. For credit unions, the NCUA should be the sole regulator. “NAFCU is supportive of a strong, independent NCUA as the agency is well-versed in credit unions' unique nature and is best equipped to examine credit unions for data privacy and cybersecurity compliance,” the trade association said.
- A safe harbor for businesses that takes reasonable measures to comply with the privacy standards. “A federal data privacy bill should take a principles-based approach to its requirements based on an institution's specific operations and risk profile. Those organizations that develop and implement appropriate measures should be provided a safe harbor,” NAFCU stated.
- Notice and disclosure requirements that are easily accessible to consumers and do not unduly burden regulated entities. “NAFCU recommends incorporating requirements from the Gramm-Leach-Bliley Act (GLBA), which credit unions are already subject to, to avoid conflicting or duplicative disclosure requirements,” the trade association said.
- Scalable civil penalties for noncompliance imposed by the sectoral regulator that seek to prevent and remedy consumer injury. “Given the difficulty in establishing damages to consumers, which increases the likelihood of frivolous lawsuits, each regulator should have the ability to assess scalable civil penalties to remedy and prevent consumer harm,” NAFCU said.
Also Examined
The white paper also examines current privacy laws that have an impact on credit unions, including the European Union's General Data Protection Regulation to the California Consumer Privacy Act (a comparison chart of the two standards is available in the paper).