WASHINGTON–With the House and Senate in recess this week, attention in Washington is primarily on a number of proposals from regulatory agencies, including those related to overdrafts.
While credit unions will also be responding to an RFP around financial inclusion, it is the CFPB’s proposed rulemaking around credit card late fees and overdrafts that are expected to draw the greatest response from CUs, according to Greg Mesack of America’s Credit Unions.
The CFPB overdraft proposal, which seeks to cap overdraft fees, also currently includes a requirement that overdraft program policies be written with an ability to pay test, along with language that seeks to close a loophole that that excludes overdrafts from the Truth in Lending Act.
Big Response
As Mesack further noted, NCUA has also made overdraft oversight a priority this year.
Mesack expects the issue will draw a lot of response from credit unions.
“Overdrafts are a symptom of the bigger CFPB war on fees,” said Mesack. “I think the greatest engagement from credit unions will be on overdrafts because it has the biggest impact on credit unions.”
Mesack said the CFPB’s proposals on overdrafts will limit the ability of credit unions to fund their basic operations, including funding financial inclusion and educational efforts.
A ‘Lot of Energy’
Mesack also pointed to a report last week from the CFPB that found CUs offer lower card rates than big banks.
“The regulators never have said how they will allow financial institutions to make up that lost revenue,” said Mesack. “Credit unions don’t have other types of revenue, and they’re suppose to be out there serving the underserved. You’re going to see a lot of energy there.”