ARLINGTON, Va. - CUNA and NAFCU aren't the only associations NCUA Board members have heard from on the agency's recently passed privacy regulation. One day after the NCUA board approved by a 2 to 1 vote new privacy regulations mandated by the Gramm-Leach-Bliley Act (see related story page 1), credit union leagues and NASCUS had already crafted comment letters to NCUA expressing their displeasure and concerns with the new regulation. "Regulatory overkill," "unreasonable burden," were some of the phrases used by leagues to describe the new regulation. "From a credit union standpoint, we don't want it," said Jim Brown, advocacy compliance and regulatory counsel for the Texas Credit Union League. "It will be an additional cost that is disproportionate to any benefits that it will bring. I doubt that most credit unions use the names of co-borrowers and guarantors for marketing purposes. This new requirement is regulatory overkill." The Florida Credit Union League agreed. "We are seriously concerned about the unreasonable burden the inclusion of this requirement would impose on credit unions," said President/CEO Guy Hood. "The FCUL believes this requirement to be extremely burdensome," he continued. "Credit unions simply do not have this information readily available. It will be time consuming and costly to retrieve, document and act on this information. It also seems to defeat the primary purpose of the rule, to protect individual privacy. It appears that current practices do more to protect privacy that does the proposed amendment." NASCUS' comment letter recognized that "the promulgation of privacy regulations was a massive undertaking, especially in light of the tight statutory requirements for publication of a final rule," said Brain Knight, director of state regulatory relations, NASCUS. But like the leagues, NASCUS expressed its concern over the complexities surrounding the amendment. The amendment creates an opt-out requirement for co-makers and co-signers of loans. Because of the way financials typically store loan information, NASCUS posited that the amendment could potentially create a significant regulatory and financial burden on credit unions. NASCUS also cited what it said was the lack of language in the amendment addressing how NCUA will monitor for compliance with the privacy rule, the role of the state regulator in enforcing privacy regulations, and enforcement in those states that may pass more stringent state privacy regulations. -
ekingoff@cutimes.com
