Forget CURIA, CUs Need to Regulate Some of Their Own Fee Practices
I'm not a fan of the credit union industry's CURIA-type legislation because it keeps pushing the envelope despite congressional warnings that credit unions should lay low and be content for awhile. Trade associations are in the business of lobbying and push for what dues-paying members want. However, we all know some members have more clout or political savvy than others. CURIA is a result of a vocal minority, not a silent majority. CURIA offers regulatory relief to credit unions, but I have an amendment to CURIA that offers direct financial relief to credit union members. I suggest capping the maximum allowable Non-sufficient funds/ Overdraft Protection fee at three times the federal minimum wage. The cap would tell average Joe/Jane American that credit unions are concerned about their financial well-being. And, it would demonstrate to Congress that credit unions really are not banks hiding behind an undeserving tax exemption. Why focus on the NSF/OD protection fee? This cash-cow is being abused. The for-profit market allows credit unions to charge $20, $25, $30 or more per item. Tax-exempt, member-owned credit unions are operating as for-profit, free-market, banks. It is unfortunate that it is necessary to regulate CU managements into something the not-for-profit, member-owned credit unions should do without regulation - that is charge member/owners a fair price for a service. Charging $20 to $30 for something that costs an estimated $2 is not a fair price. Although overdraft protection is operationally riskier than NSF returns, I'm not aware of a single courtesy pay program that would still not be profitable at $15.45 per item. We may not make the "400% increase in fee income" that trade association-endorsed vendors promise, but $15.45 would keep us closer to our industry's not-for-profit responsibility. A possible trade-off for accepting a fee-cap could be an exemption from soon-to-be imposed Reg. DD disclosure requirements. Some of my peers will argue a fee cap is unnecessary regulation and goes against free market economics. Sadly, it is necessary. Too many credit union professionals forgot or never really appreciated that CUs are member-owned. These people see each CU member as an individual profit center. Regarding the free market economy, try arguing that one with tax-paying bankers. And, a fee cap is not much different than the existing interest rate cap. I don't expect credit unions to willingly give up 30% to 40% of this revenue source (although CFCU does every day with $15 charge for NSF and overdrafts), and NCUA may not be very supportive of the idea given the industry's growing dependence on fee income. However, a congressional staffer may read this. If so, please carry the message and idea to Congress on behalf of the silent majority. Dale Kerslake President/CEO Cascade FCU Kent, Wash.