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

Samantha: Hello, this is Samantha Shares.

This episode covers NCUA
Vice Chairman Kyle S.

Hauptman delivers remarks at the 2024 ACU
Congressional Caucus in Washington, D.C.

The following is an audio version of
that advisory and the press release.

This podcast is educational
and is not legal advice.

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And now the remarks.

NCUA Vice Chairman Kyle S.

Hauptman delivers remarks at the 2024 ACU
Congressional Caucus in Washington, D.C.

As Prepared for Delivery
on September 9, 2024

Good morning and thank you.

This conference is one of my favorites.

One reason I’m here is to get ideas
on how I should focus the remaining

days I have left in this job.

Around this time next year,
the White House will likely

announce a new Board Member.

That’s because my term on the
NCUA Board ends next August, so

I have less than a year left.

Whew, I was worried that
would be an applause line.

That’s part of my message today:
that what ACU does matters,

that your advocacy matters.

Here’s an example of a small, yet
useful improvement that was entirely

because of people in this hotel today;
we’re revising our records retention

policies, so you don’t feel compelled
to keep records from decades ago.

It all started with a call I had with
CUNA’s Small Credit Union Committee.

They mentioned credit unions that
had boxes from 40 years ago because

they were concerned the NCUA might
someday ask for something from back

then, all because the NCUA had never
put any kind of limit on how many

years of information we can require.

I saw photos of storage units, piled
high with clearly ancient papers,

printed on that old dot-matrix paper.

Remember those with the perforated
sides with little holes?

I had to look it up, that’s
called ‘continuous feed’ paper.

So, in April we put out an
Advanced Notice of Proposed

Rulemaking, and help is on the way.

Again, all because I was in a
meeting with folks like you.

I’m very aware that the only people
who think compliance is easy are

those that don’t have to do it.

Other agencies normally do have a limit on
records retention, like the SEC requires

records from the last seven years.

The IRS only audits tax
returns in the past three years

after the return is filed.

So, the upshot here is that you’re
off the hook on your 2019 taxes.

But seriously, your advocacy created real
tangible results, that’s the message.

Those storage units of old records may
have continued being piled full of boxes

for years to come, but instead someone
brought the situation to our attention.

It wasn’t controversial
either, all three Board Members

immediately agreed on what to do.

We just needed someone like
you to send a photo, to tell

us what is actually happening.

And in America, you deserve protection
from an overbearing government.

The same reason there’s a statute
of limitations for being prosecuted.

So, if we at the NCUA find ourselves
wanting records from 1994 that’s

our problem, not yours, because
government should have to face

deadlines and accountability as well.

And speaking of protecting us from
government: regarding what are labeled

as junk fees, I’ve never seen a
credit card late fee or an overdraft

fee that comes anywhere close to
what governments themselves charge.

Now, I want to address an issue
that has been a topic of much

discussion recently: the potential
impact of limiting non-sufficient

funds (NSF) and overdraft fees.

I was, and am, opposed to the NCUA’s
new policy of forcing credit unions

larger than $1 billion to publicly
state their revenue from those sources.

If NCUA or other agencies ‘get over
their skis’ and interfere in the

private financial affairs of credit
unions and their members, the resulting

credit union use of NSF and overdraft
services could have the paradoxical

effect of limiting access to financial
services for those who need it most.

Most importantly, America’s more
than140 million credit union members

know their lives better than we do.

And removing overdraft often
results in the consumer paying much

higher fees and treated much worse.

The ultimate irony here
is that governments always

charge the highest fees.

Governments often have coercive powers
far beyond any financial institution.

Late child support payments mean
no shared custody of children.

Cars with a boot because of late parking
tickets come with late fees that exceed

any bank or credit union in this country.

People have had my experience, of trying
to get to work and their car is either

towed because of late registration
fees or booted due to unpaid tickets.

Some of those people thus committed parole
violations because they were late to work.

This stuff is often
avoided via overdraft fees.

Paying a $30 overdraft fee is better than
the $1,200 fee for filing taxes late.

For many credit union members, overdraft
protection and the ability to occasionally

rely on NSF services are not just
conveniences — they are essential tools

that help them manage their finances.

Eliminating these options could
drive some members away from credit

unions and towards less regulated,
higher-cost financial service providers.

In essence, by restricting these services,
we may inadvertently push consumers into

riskier and more expensive financial
arrangements, reducing financial

inclusion rather than enhancing it.

It's crucial that we strike a balance.

Our regulatory framework should protect
consumers from predatory practices

without depriving them of the financial
tools they need to navigate their lives.

You can tell it’s an issue I’m passionate
about, and I appreciate your attention.

But the consequences of well-intentioned
government are too painful to ignore.

And the victims of overbearing government
are rarely the elites, but rather

the ‘people of modest means’ that
credit unions are supposed to serve.

There is a well-intentioned movement aimed
at protecting consumers from excessive

fees, which is something we all support.

I’ve paid those fees myself.

It’s not fun.

However, we must also consider
the unintended consequences

of such regulations.

I think we all get the point here:
paying fees isn’t fun, but for millions

of people it’s the better option.

Make no mistake: I personally
don’t want to pay nor charge

anyone overdraft or NSF fees.

And there are ways to reduce the number
of situations that result in those fees.

Faster, real-time 24/7 payments
would help a lot; this exists all

over the world but not in the U.S.

Financial literacy and savings
programs can also help reduce

the sting of overdraft fees.

I’m not on the side of anyone
charging stiff overdraft fees.

I’m saying we need to be aware
of what happens when NCUA or CFPB

interferes in people’s private lives.

We know there are beneficiaries of
these misguided policies; the policies

wouldn’t exist if no one benefited.

But who benefits from government
attempts at price controls?

And finally, before we get to Q&A,
I want to mention two fascinating

new technologies that we often hear
about: Artificial intelligence,

and blockchain and digital assets,
which includes cryptocurrency.

I’ve made clear that the NCUA
shouldn’t be a technophobic agency.

We at the NCUA are already exploring
ways to use AI for fraud detection,

discussion boards for examiners, and
ultimately an external-facing customer

service chat for credit unions.

We already use AI to scan Call Reports.

As for digital assets, stablecoins
are already changing America’s

creaky payments system, especially
for international payments, as well

as providing loan opportunities
with the easiest-to-foreclose-on

collateral you can imagine.

My main point here is that credit unions
have always evolved with new technology;

they were early users of ATMs and
then the internet and mobile banking.

It’s important that we at the NCUA
understand that innovation is necessary.

I had a reporter ask me, “Aren’t you
nervous about being pro-AI and pro-crypto,

and do you worry about the problems
they may cause?” I replied, “Do I worry

there might be problems, be downsides?

I know there will be.”

Every new, widespread
technology comes with downsides.

Did you know that there zero
car crashes before we had cars?

Yet, none of us arrived here on a horse.

For that matter, I’ve been asked
about crypto’s reputation in some

circles as being used by criminals.

Well, if you think crypto is often used
for illicit purposes, you’re going to

freak out when you hear about cash.

That is to say, my true north is making
sure credit unions don’t go the way

of Blockbuster video because their
regulator wouldn’t let them compete.

Thank you for having me.

This concludes NCUA Vice Chairman Kyle S.

Hauptman delivers remarks at the 2024 ACU
Congressional Caucus in Washington, D.C.

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

on LinkedIn, or at mark Treichel dot com.

This is Samantha Shares and
we Thank you for listening.