Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

Samantha: Hello, this is Samantha Shares.

This episode covers N C U A Board
Member Todd Harper Statement on the

Decision to Curtail the Collection of
Overdraft and Non-sufficient Fund Fees

The following is an audio version of
that Statement This podcast is

educational and is not legal advice.

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And now the Statement.

N C U A Board Member Todd Harper issued
the following statement about the agency’s

decision to curtail the collection
of total overdraft and non-sufficient

fund (NSF) fees for federally insured
credit unions with more than $1

billion in assets beginning with Call
Reports for the first quarter of 2025.

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.

To advance credit union efforts to
benchmark fees against other financial

institutions, improve marketplace
competition, and increase consumer

understanding of the fees they’re charged
within the credit union system, the N

C U A required federally insured credit
unions with more than $1 billion in

assets to disclose, separately, income
from overdraft and NSF fees beginning

with the 2024 first quarter Call Report.

With today’s release of the 2024
fourth quarter Call Report results,

however, that desirable transparency
experiment will regrettably end.

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 percent of revenue.

Some outliers charged fees amounting
to as much as 18 percent of income.

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 N

C U A began collecting and publicly
reporting this data on Call Reports.

But, by unilateral action by the
Chairman, credit union member-owners

and the public will now no longer have
access to this important information.

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 N C U A 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 N C U A 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.

If such data was once already
public information, why

now sweep it under the rug?

The Chairman also noted that the
appropriateness of overdrafts and NSF

fees charged is a matter between a
credit union and its member-owners.

If those member-owners ultimately
determine how their credit union is

run, then credit union management
should make their overdraft and NSF

income upon member-owner request.

As a steward of the credit union system
and someone whose father and grandfather

started credit unions, I strongly
believe in the concept of a credit

union movement to lift up everyone.

But, this unnecessary decision 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.

America’s credit union
member-owners deserve better.

This concludes the statement.

If your Credit union could use assistance
with your exam, reach out to Mark Treichel

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This is Samantha Shares and
we Thank you for listening.