NASHVILLE—Credit unions should expect implementation of NCUA’s FOM rule to be delayed by a banker lawsuit, while separately taking time to conduct stress tests on what losing 20% to 25% of overdraft revenue could mean.
NAFCU President and CEO Dan Berger offered both those suggestions during PSCU’s 2016 Member Forum here, in addition to covering much of what is top of mind for CUs in Washington today.
If the NCUA board approves a final FOM rule this year, don’t expect implementation to occur for a while, as Berger said he is aware that bankers are preparing to sue NCUA if the rule is passed.
“I think they will likely sue NCUA on this,” said Berger. “I already met with the presidents of the ABA and ICBA and they say they are going to sue NCUA on this. This rule will likely end up in the courts. So as an industry we have to be ready for that, to deal with the time it will take the rule to be addressed in the courts.”
Meanwhile, with the CFPB’s attention on overdrafts, and with with many suspecting the agency would like to see overdrafts done away with altogether, Berger urged credit unions to conduct stress tests that would assume loss of 20% to 25% of annual OD revenue.
“The CFPB wants to get rid of it all,” Berger said, despite the fact that when CFPD director Richard Cordray contacted consumer groups regarding overdrafts, they indicated a preference that the service to remain.
'Scary' Agency
Calling the CFPB a “scary” agency, Berger believes smaller institutions will fall into the Bureau’s crosshairs.
“Who is next? The Community banks and credit unions,” said Berger. “Don’t think that just because we wear the white hats that we are immune (from CFPB rulemaking and actions).”
Berger also predicted that a credit union will become a target of CFPB enforcement.
“I think you will see a credit union get dinged for debt collection, and afterward the agency probably won’t issue any written guidance—tell us the rules of the road, inform us how to do debt collection properly,” said Berger. “So we are trying to reverse engineer what the CFPB is doing with banks and debt collection so we can possibly avoid credit unions getting dinged.”
NCUA Board Seat
Turning to NCUA, Berger told credit unions not to expect Debbie Matz’s board seat to be filled soon after the chairman leaves in April.
Berger said that in conversations in Washington that NAFCU has not heard any names surface as potential nominees to fill Matz’s seat.
“And this is not the kind of board seat that a lot of people hold up their hands and ask for,” said Berger. “I doubt that it gets filled until a new president steps into office.”
He also warned CUs that if the Democrats take control of the Senate after the elections, it will limit credit union and bank efforts to roll back Dodd-Frank, as the Democrats are “protective” of the legislation.
Berger closed by urging credit unions to make sure they are offering mobile and online banking. He pointed out NAFCU research shows that 1,511 federally insured CUs currently don’t offer online banking and 5,119 don’t offer mobile.
“Your mobile app is your mobile branch,” said Berger, adding that consumers trust their credit union above all other financial sources. “You have the trust factor, so members who do online banking want to do business with you.”