NAFCU Signals Strong Opposition to Further Data Collection Advanced by NCUA
ARLINGTON, Va. -- When NCUA Board Member Gigi Hyland asked credit unions for feedback to the report from the agency's Outreach Task Force, she told credit union leaders at CUNA Governmental Affairs Conference that she was confident they would provide their opinions.
"Read the report," Hyland said. "Yes, I know its long. But read it and share it with management and board, think about impact on the recommendations might have and let the NCUA board know what you think. I know you are not shy."
Some CUs, particularly NAFCU members, have already begun to make their opinions known. In a March 4 letter to the agency, NAFCU strongly staked out a position against different parts of the task force recommendations, urging the agency not to continue collecting data on credit unions' member service and to allow credit unions to decide if they want to make executive compensation public.
In its letter to the agency, NAFCU said it was aware that the task force had actively sought to find the least burdensome way of collecting information, but still opposed any further data collection on the grounds that such collection could lead to further regulation.
"In our view, there is no statutory or congressional directive for NCUA to collect this type of credit union data," NAFCU wrote. "Further, it is NAFCU's opinion that the recommended data collection and reporting requirements could lead to the regulatory imposition of further burdensome requirements for credit unions that would not only have a fundamentally negative impact on the way credit unions conduct business, but would also have significant detrimental consequences for the strength and vitality of the federal credit union charter."
Instead of focusing on collecting more information regarding what CUs are already doing to serve their members, NCUA should focus instead on removing more regulatory burdens to help them serve more of their members, particularly those of modest means.
NAFCU argued that the nature and diversity of credit union charters meant that NCUA would almost be forced to evaluate them according to an arbitrary standard that could not account for their individual circumstances.
"Should the NCUA Board adopt the task force's recommendation to continue data collection, it is inevitable that credit unions will be measured against some arbitrary standard," the association wrote. "NAFCU firmly believes that imposing a one-size-fits-all standard for credit union service would be severely ill-advised and would interfere with the ability of well-intentioned credit unions to achieve the important public purpose of providing a range of services to their members--both new and longstanding," NAFCU added.
NAFCU also disapproved of the idea that the data will only be collected from federal credit unions, noting that they only represent part of the credit union industry. The association pointed out that existing data collected for the Home Mortgage Disclosure Act already indicated that credit unions are making the loans they are expected to make.
"HMDA data reflects that when compared to banks and thrifts, credit unions approve real estate loans that are smaller in size; approve a greater percentage of conforming real estate loans; have a greater percentage of real estate borrowers with less than $40,000 in income; and grant fewer real estate loans charging three percentage points or more above the Treasury benchmark. Survey of Consumer Finances (SCF) data also highlights that credit unions are serving their members well," NAFCU wrote.
NAFCU didn't offer as many reasons for its opposition to the Outreach Task Force's recommendations on the public reporting of executive compensation, other than to note that many of the credit union leaders who appeared before the task force opposed it and that forcing such reporting only for FCUs would effectively disadvantage the federal credit union charter.
"While generally state chartered credit unions must report compensation data on IRS Form 990, many state credit unions are only required to provide such data on a consolidated basis," the association reminded the agency. "As such, NAFCU believes that any regulatory requirement for the collection and disclosure of federal credit union executive compensation would be to the detriment of federal credit unions, and present a significant threat to the continued strength of the federal charter."
It's unclear whether or when CUNA will follow NAFCU with formal opposition to the Outreach Task Force's recommendations.
Tom Dorety, CEO of the $6 billion Suncoast Schools Federal Credit Union and incoming CUNA chairman, sounded a more conciliatory note towards the recommendations at CUNA's GAC earlier this year.
Dorety spoke of the increased interest in Congress to examine how all financial institutions provide loans and alluded to NCUA seeking to respond to the tenor of lawmakers in its suggestions about data collection.
He also said credit union unwillingness to compromise on data collection could be seen by some as a refusal "to acknowledge a responsibility to serve people of modest means" and might be "plain foolish and maybe a little dangerous for credit unions."
He also pointed out that CUs have far more tools now, particularly in the Real Solutions and Real Deal programs, which are administered by the National Credit Union Foundation in conjunction with state leagues.
"We clearly have gotten the message in the last few years" Dorety told GAC attendees. "But if we move a little quicker and more concerted effort, this [issue of CUs serving their members] will become a non-issue for our regulator and our legislators and we will prove we do a much better job than banks do in serving working class Americans."