ALEXANDRIA, Va.—One week after NCUA Board Chairman Kyle Hauptman announced NCUA will no longer publish overdraft and non-sufficient fund fee income for individual credit unions, the two Democratic members of the board issued statements opposing the decision.
Board Members Todd Harper and Tanya Otsuka, in their remarks, asked their Republican counterpart to reconsider his decision, with Harper adding the move sweeps CU OD data “under the rug.”
“Member empowerment is a cornerstone of the cooperative credit movement. For credit unions, which are built on the philosophy of ‘people helping people,’ increasing transparency is a simple way to demonstrate the credit union difference, enable consumers to make informed financial decisions, and help maintain trust and confidence in our cooperative system of credit. In that spirit, the NCUA began collecting and publishing quarterly Call Report data on revenues credit unions with over $1 billion in assets made from overdraft and non-sufficient funds (NSF) fees last year,” Otsuka said.
Tanya Otsuka
“Unfortunately, the fourth quarter 2024 data published today will be the last to include information on overdraft and NSF fee income. On March 3, 2025, Chairman Hauptman unilaterally announced changes to the way the NCUA collects overdraft and NSF fee information. Specifically, starting on March 31, 2025, the agency would ‘no longer publish overdraft and non-sufficient fund fee income for individual credit unions’ and this information would ostensibly be collected during supervisory examinations.
“This is a step in the wrong direction,” continued Otsuka. “There is no data to suggest credit unions limited the services they provide low-income or underserved consumers last year simply to avoid having to report fee income on the NCUA’s Call Reports. Credit unions with higher overdraft and NSF fees also do not appear to offer lower fees to members for other services, nor better interest rates. Overdraft and NSF fees put a strain on members who are likely already struggling and may further trap them in a cycle of financial hardship that can be difficult to escape. That is why providing the public information about fees through the NCUA’s Call Reports enabled consumers across the country to more readily compare between credit unions and choose the institution that best fit their needs.
“I urge the NCUA Chair to prioritize transparency and to continue the practice of quarterly reporting and public disclosure of overdraft and NSF fee income for individual credit unions,” concluded Otsuka.
GAC Commnets
Kyle Hauptman
Hauptman, during his discussion with America’s Credit Unions President and CEO Jim Nussle at the Governmental Affairs Conference last week, when he made the overdraft announcement, said, “There is a well-intentioned movement aimed at protecting consumers from excessive fees, which is something we all support. However, we must also consider the unintended consequences of such policies. In this instance, the previous data collection policy incentivized credit unions to avoid serving the needs of low-income and underserved communities. These fees can be the best option in a bad situation, saving money and protecting individuals’ credit scores. Overdraft also protects people from much higher costs imposed by their local governments.”
Harper, in his statement, said that for “markets to work efficiently, transparency is needed. That’s a bedrock principle of economics. And, it’s one of the many reasons why credit union member-owners and the public should have clear visibility into the income a credit union generates from overdraft and NSF fees charged to its member-owners.
“During the last year, we’ve found that reporting institutions have collected $3.8 billion in such fees. Some charged no fees at all. For most reporting credit unions, overdraft and NSF fees accounted for between 2% and 5% of revenue. Some outliers charged fees amounting to as much as 18% of income,” Harper said. “For those billion-dollar-plus credit unions with higher overdraft and NSF fees, we also found that they did not use those fees to subsidize better interest rates or lower other fees.
“Federally insured banks with more than $1 billion in assets began reporting these numbers in 2015. Since then, consumers have benefitted as banks have lowered their reliance on such fees. In fact, the Consumer Financial Protection Bureau found that roughly two out of three banks with $10 billion or more in assets have eliminated NSF fees, saving consumers $2 billion annually. Yet, among credit unions with greater than $10 billion in assets, four out of five continue to charge NSF fees. That overreliance on such fees is one of the many reasons why the NCUA began collecting and publicly reporting this data on Call Reports.
Unilateral Action
Todd Harper
“But, by unilateral action by the Chairman, credit union member-owners and the public will now no longer have access to this important information,” continued Harper. “If credit unions are to live up to their statutory purpose of supporting the financial needs of ‘people of modest means’ and the credit union movement’s oft-touted ‘people-helping-people’ philosophy, then credit union member-owners should have access to this basic market information, so they can make better decisions about how and where to deposit and access their hard-earned money.
“While the NCUA will no longer publish overdraft and NSF fee income for individual credit unions on a real-time quarterly basis, the agency will instead collect the data during supervisory examinations. This approach, however, will likely shield credit union members from accessing the information through the Freedom of Information Act. Ultimately, this non-disclosure will result in financial exclusion, especially when one considers that NSF is a fee for not paying for an item.
“In my view, the NCUA should restore fee transparency for overdraft and NSF fees on Call Reports,” concluded Harper. “If the Chairman is unwilling to reverse course, then the overdraft and NSF fee data collected in the exam process at individual credit unions shouldn’t be shielded from public release through the Freedom of Information Act. If such data was once already public information, why now sweep it under the rug?”