A decision to rescind a requirement that credit unions publicly disclose the fees they charge for overdrafts has caused a rift along partisan lines among members of the three-person board that oversees the federal credit union regulator.
On March 12, the two Democrat appointees on the National Credit Union Administration (NCUA) Board issued separate statements at odds with a decision by the Republican appointed chairman of the agency board. Chairman Kyle Hauptman (named chairman by President Donald Trump in January) March 3 issued a statement announcing that the agency would no longer publish overdraft and non-sufficient fund fee income for individual credit unions. Instead, Hauptman said, the NCUA would collect the data during supervisory examinations.
The data was to be collected only for federally insured credit unions with more than $1 billion in assets
Hauptman described the appropriateness of reporting of overdrafts and NSF fees as a matter between a credit union and its member-owners. He also said fee data collection “incentivized credit unions to avoid serving the needs of low-income and underserved communities.”
Hauptman discussed the policy change – which had been effect for about a year – before a conference of credit unions the week before.
The other members of the board – who make up its majority – disagreed with Hauptman’s approach.
In his statement, Board Member (and former NCUA Board Chairman) Todd Harper said NCUA should restore fee transparency for overdraft and NSF fees on Call Reports. “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,” Harper said. “If such data was once already public information, why now sweep it under the rug?”
Harper also addressed Hauptman’s comment that the fees charged by the credit union is a matter between the institution and its members. “If those member-owners ultimately determine how their credit union is run, then credit union management should make their overdraft and NSF income [available] upon member-owner request.
Harper criticized Hauptman’s decision. He said it “moves that credit union movement closer to an industry, one that’s worse than banks when it comes to fee disclosures.”
“Profiting from consumers’ problems will come back and bite you,” Harper said. “America’s credit union member-owners deserve better.”
Board Member Tonya Otsuka called Hauptman’s action “unilateral” and a step in the wrong direction.
“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,” Otsuka said. “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.”
Otsuka added that credit union members have a right to know how their institution operates, “just like any investor would if they purchased stock in a publicly traded company.”
“We shouldn’t keep credit union members in the dark,” she said.
The NCUA Board member urged Hauptman to “prioritize transparency” and continue quarterly reporting and public disclosure of overdraft and NSF fee income for individual credit unions.
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