ARLINGTON, Va.—In advance of Barack Obama’s upcoming State of the Union address, NAFCU has sent a letter to the President urging support for national data security standards and regulatory relief for community financial institutions.
The letter, from NAFCU President and CEO Dan Berger, recognized Obama and the Administration for the leadership and actions on the cybersecurity and data security front but noted that more had to be done.
"While financial institutions, including credit unions, have been subject to federal standards on data security since the passage of the Gramm-Leach-Bliley Act, retailers and many other entities that handle sensitive personal financial data are not subject to these same standards," Berger wrote.
Berger pointed out that credit unions have suffered steep losses in re-establishing member safety after a data breach occurs.
“They are often forced to absorb fraud-related losses, many of which stem from a negligent entity’s failure to protect sensitive financial and personal information in their systems,” Berger said. “As not-for-profit cooperatives, credit union members are the ones that are ultimately impacted by these costs.
"It is with this in mind that NAFCU urges you to support common sense bipartisan legislation to create national data security standards such as the Data Security Act of 2015,” continued Berger. “Introduced by Representatives Randy Neugebauer and John Carney as H.R. 2205 in the House, this legislation received strong bipartisan support in a House Financial Services Committee mark-up in December. Similar legislation has been introduced by Senators Roy Blunt and Tom Carper as S. 961 in the Senate."
In terms of regulatory relief, Berger underscored that "While it is universally accepted that community financial institutions such as credit unions did not cause the economic crisis, credit unions have still been overwhelmed by the constant wave of regulatory burden they have faced since the passage of the Dodd-Frank Act."
He noted that "Credit unions have always served as a safe haven for consumers during times of economic difficulty. This was certainly the case during the economic crisis. While other lenders pulled back on their lending, credit unions were still extending credit to consumers, in many cases increasing their lending. However, their capacity to serve as a vital resource of financial services to those of modest means, as is their mission, is being curtailed because of regulatory burden. With every additional regulation, credit unions are forced to place more emphasis on compliance and less on providing needed financial services to their members. "
Berger shared concerns about the CFPB, saying, "The impact of the compliance burden, in particular the growth of CFPB rulemaking, is evident as the number of credit unions continues to decline, dropping by more than 17% (more than 1,280 institutions) since the second quarter of 2010; 96% of which were smaller institutions with assets of less than $100 million. One reason for the decline is the increasing cost and complexity of complying with the ever-increasing onslaught of regulations."
To address the overwhelming regulatory burden, Berger urged support for comprehensive regulatory relief for credit unions both on the legislative and regulatory fronts.