WASHINGTON—NAFCU said it continues to support the interim final rule on overdrafts proposed by NCUA Chairman Rodney Hood at the agency’s most recent board meeting.
The proposal was tabled after board members J. Mark McWatters and Todd Harper voted against it.
“NAFCU thanks Chairman Hood for supporting this interim final rule and whole-heartedly agrees that the time for this relief is now,” wrote NAFCU President and CEO Dan Berger in a letter to the agency. “The changes proposed by this rule offer critical relief for credit unions seeking to assist struggling members during the COVID-19 pandemic.”
Berger said the current regulation requiring federal credit unions to work with members to resolve negative balances within 45 days places “unnecessarily burdensome” requirements on FCUs.
“The 45-day timeframe is an unnecessary burden for FCUs under normal circumstances, and in light of the COVID-19 pandemic, FCUs can least afford to expend staff time and resources unnecessarily,” explained Berger. “In comparison, banks are permitted reasonable flexibilities for resolving these negative balances within the confines of generally accepted accounting principles (GAAP) and existing interagency guidance, both of which apply to FCUs.”
The tabled interim final rule would allow FCUs to set their own reasonable timeframes for resolving these negative balances, so long as they comply with GAAP.
Additional Requests
Additionally, Berger called on NCUA to make the proposed relief permanent as, even under normal circumstances, “the requirement does not provide protection to consumers, ensure safety or soundness, or otherwise serve a meaningful role in the NCUA’s regulatory scheme.”