The Financial Stability Oversight Council renewed its call forthe NCUA to be given examination authority over third-party vendorsin its annual report.

The FSOC, a multi-agency board charged with identifying andresponding to threats to the U.S. financial services system, alsoexpressed concern about the impact oil prices may have on creditunions in certain states. In addition, the council noted creditunions with a large number of members who are taxicab drivers haveexperienced problems.

“Although credit unions' close ties to specific geographies orbusiness organizations offers certain advantages, localizedeconomic distress can present these institutions withcertain unique challenges,” the FSOC said in the report.

In the report, released this week, the FSOC said it iscontinuing its effort to synchronize Congress with theresponsibilities financial regulators have over third-partyvendors. The FSOC included the same comments in its annual report last year.

“The Council supports the granting of examination andenforcement powers to (the) NCUA and FHFA to oversee third-partyservice providers, including information technology, and morebroadly, other critical service providers engaged respectively withcredit unions and the GSEs,” the FSOC wrote.

NCUA Chairman Rick Metsger, an FSOC board member, said he ispleased that the council is again asking Congress to give the NCUAoversight powers.

“While other federal financial institution regulators alreadyhave third-party authority, [the] NCUA's lack of vendor authoritywith respect to cybersecurity and other threats creates avulnerability within the financial system and limits the agency'sability to better protect credit unions, their members and theShare Insurance Fund,” Metsger said.

Credit union trade groups have said the additional oversight isnot needed.

Credit union vendors generally fall into two categories –companies that also serve banks and therefore are investigated bybanking regulators, and CUSOs that are already examined by theNCUA, according to CUNA Chief Advocacy Officer Ryan Donovan.

“We believe that between the two, risks can be appropriatelyidentified and addressed,” Donovan said. “Any additional authoritywould only add cost and burden to credit unions.”

NAFCU also opposed the plan.

“We believe such authority would be costly and unnecessarysince [the] NCUA already requires credit unions to ensure thevendors they work with provide reports directly to the agency,”NAFCU Director of Regulatory Affairs Director Alexander Monterrubiosaid. “NAFCU recognizes the importance of cybersecurity and riskmanagement, but we firmly believe that cybersecurity andthird-party vendor examination authority for [the] NCUA do not gohand in hand.

The FSOC also said potential concentration risks exist forcertain credit unions. It said 46 federally chartered credit unionswith $8 billion or more in assets are exposed to the petroleumrefining business. However, the total exposure cannot be measuredin part because state chartered credit unions are not required toreport their field of membership routinely.

The committee also said eight credit unions have close memberties to the taxicab industry, adding that competition fromride-sharing companies has affected the taxi business. Those creditunions are affiliated with about $3.5 billion in loans backed bytaxi medallions, the FSOC said.