#79 Is NCUA Planning for Separate Consumer Compliance Exams?

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During his GAC Speech, NCUA Chairman Todd Harper said:

"... It doesn't seem fair that credit union members have less protection than bank customers...and it's why we are now creating consumer compliance specialist positions in the field and starting the process to build out an enhanced consumer compliance exam program..."

more text from his speech follows:

State of the Credit Union System

In terms of overall performance, federally insured credit unions remained on a solid footing last year. Total loans, assets, and insured shares all increased. Capital levels also remained strong. Economic activity — however — has begun to cool. Insured share growth has slowed, as some consumers have drawn down their built-up savings. Households are also taking on more debt. And, in the event of an economic slowdown, these factors could hinder borrowers’ ability to repay outstanding debt, exposing your credit union to greater levels of credit risk. That’s why we must all take actions to prepare for a downturn.

Interest Rate Risk

In fact, your ability to manage interest rate risk will be a crucial factor in your performance in 2023. Interest rates rose across the yield curve last year. As rates increase in the current economic environment, so does the associated risk that makes short-term liquidity events possible. The potential for sudden changes in either inflation, the rate environment, or the economy mean that you must remain nimble.

Consumer Financial Protection

Now, I know that many of you have heard me say this before, but I’m going to keep saying it because it is part of my core beliefs: All consumers — regardless of their financial services provider of choice — should receive the same level of consumer financial protection. Yet, unlike the federal banking agencies, the NCUA does not conduct separate consumer compliance exams nor does the agency assign a separate consumer financial protection rating. It doesn’t seem fair that credit union members have less protection than bank customers.

During my four years on the NCUA Board, the agency has made some strides like increasing its fair lending exams and reviews. And, it’s why we are now creating consumer compliance specialist positions in the field, and starting the process to build out an enhanced consumer compliance exam program. And, as part of its supervisory priorities this year, the NCUA continues to focus on overdraft programs and will dive more deeply into certain features.

To that end, NCUA examiners will review website advertising related to overdraft programs, balance calculation methods, and settlement processes. And, examiners at federal credit unions with more than $500 million in assets will dig into authorize positive, settle negative transactions, as well as some other problematic fees. Our supervisory efforts here are aimed at creating a more equitable financial system that enables financial security for credit union members, especially those of modest means.

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In 33 years at NCUA I served as Executive Director, Regional Director, Director of Special Actions, Supervisory Examiner, and Principal Examiner. I began at the ground level as an examiner. I rose to the top. As Executive Director I supervised your Regional Director. I know how NCUA thinks and why they think it. I know the examination process inside and out. I know how to communicate and negotiate with NCUA. I know how to get NCUA to YES instead of NO.

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