WASHINGTON — While CUNA and NAFCU supported regulatory guidance in the area of funds exempt from garnishment orders generally, they–and the handful of credit unions that commented to NCUA–said that the burden should not be placed on credit unions.
On the specifics of the proposal CUNA was supportive of items like unfreezing accounts as quickly as possible but felt that differentiating between protected funds, like Social Security benefits, and others was "infeasible."
NAFCU Senior Counsel and Director of Regulatory Affairs Carrie Hunt wrote that NAFCU was concerned that many of the best practices not only burden credit unions but also would force them to make "critical determinations" that belong in the courts. It could also hold credit unions responsible to "police activities that should be carried out by the parties involved in the garnishment." She continued, "Further, the proposed joint guidance and best practices may unnecessarily and unfairly place the focus on credit unions rather than other parties that are in better position to ensure that federally protected funds are not improperly frozen."
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Instead, CUNA said the agencies should take a different approach by working with the National Conference of State Legislators to address concerns by crafting model statutory language. "We think the objectives of such language would be to encourage greater uniformity in garnishment proceedings; ensure adequate notice is provided to consumers by the courts that are reviewing the claims for garnishment; that such notices spell out the exemptions for federal benefit funds; and that the courts should work with the parties through the hearing or review process to develop garnishment orders that recognize the amount of such funds that are exempt," CUNA Deputy General Counsel and Senior Vice President of Regulatory Advocacy Mary Dunn wrote.
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