ALEXANDRIA, Va.–NCUA Chairman Todd Harper spoke to the Brookings Institution here, where in addition to a broad update on CU- and agency-related issues, he also indicated the agency will be giving greater scrutinty to overdraft programs.
In his remarks Harper touched on themes that will be familiar to most in credit unions. Butin his comments related to the agency's focus on consumer compliance issues, which has been a point of emphasis by Harper, the chairman said "overdraft and non-sufficient fund fees are a key component of the NCUA’s review. NCUA examiners this year will continue an expanded review of credit union overdraft programs, including website advertising, balance calculation methods, and settlement processes.
"Problematic overdraft programs and non-sufficient funds alerts include fees that aren’t reasonable and proportional, rely on systems that authorize positive and settle negative, or impose multiple representment fees, often in one day," Harper said.
As CUToday.info has reported, credit unions, especially over the past year, have been the target of both media scrutiny and litigation related to their overdraft and NSF programs.
Quoting a Yogi
Meanwhile, after citing Yogi Berra’s observation that “The future ain’t what it used to be,” Harper told the meeting the “future viability and success of the evolving credit union system requires not only planning, but flexibility and agility as new developments call for changes or course corrections.”
Harper touched on numerous other issues, including:
Financial Stresses
Harper updated attendees on the upcoming 90th anniversary of the Federal Credit Union Act and the history of credit unions in the U.S., how NCUA came to be, and the status of the overall CU balance sheet in the U.S.
But he also reiterated what he called “growing signs of financial strain on credit union balance sheets and in household budgets, along with growing consumer financial stress,” sharing the numbers around the rise in delinquencies CUs have been experiencing and the degradation of CAMELS ratings in the industry.
“These aggregate statistics result from economic warning signs that have been flashing for some time, including inflationary pressures, geopolitical turbulence, and growing interest rate, liquidity, and credit risks within the credit union system,” Harper said. “The numbers also show that today’s economic environment requires active — not passive — management by credit union boards and senior leadership. We all need to be paying attention.”
Other Points
Other issues Harper addressed during his remarks included:
- Vendor Oversight Authority. Harper repeated his call for Congress to grant the agency the power to oversee third party vendors. His request came on the same day America’s Credit Unions had sent a letter in advance of a hearing in the House in which the trade group urged no such authority be granted.
- Central Liquidity Facility. Harper said liquidity management also remains a focus for NCUA, saying the Central Liquidity Facility has taken on “greater importance” as a liquidity backstop. He called on Congress to restore expanded borrowing authorities for the CLF.
- Consumer Financial Protection. In addition to the comments related to overdrafts, above, the chairman said“protecting consumers’ interests and their hard-earned savings” remains important. He quoted NCUA’s vision statement, which says one role of the agency is to “[s]trengthen communities and protect consumers by ensuring equitable financial inclusion through a robust, safe, sound, and evolving credit union system.”