CUNA and NAFCU are urging the NCUA to be cautious about limiting credit unions' ability to offer overdraft protection programs.
The agency is proposing a rules change mandating that all credit unions-not just those that promote overdraft protection programs-be required to disclose fees for those programs on their statements.
CUNA said the regulation would "require significant policy changes," and, therefore, the NCUA should survey credit unions to see if members believe that these disclosures are useful. CUNA Senior Assistant General Counsel Jeffrey Bloch predicted that the survey would show that the disclosures "are another example of information overload that is confusing to consumers."
NAFCU Associate Director of Regulatory Affairs Dillon Shea wrote that "there is little reason to believe that members will pay more attention to their monthly statements as a result of yet one more required disclosure." He also suggested that the agency differentiate between overdraft fees and not sufficient fund fees.
Bloch also wrote that CUNA favors the rules change that funds accessible under an overdraft protection not be included as part of an "available balance" and allowing disclosures to be provided electronically.
Both groups also urged that the Federal Reserve exercise caution in implementing a proposed rule change, which includes disclosure and other requirements for those lenders that offer private student loans solely for post-secondary education expenses. It implements provisions of a federal law passed last year that limits co-branding loan products with educational institutions in the marketing of private student loans but does not impact credit unions that share their name with colleges and universities.
CUNA's Bloch expressed concern that the proposal is too broad, and that it will cover a significant portion of consumer loans. This will increase compliance costs, especially for the "vast majority" of credit unions that don't market themselves as student loan providers. He also recommended that borrowers have no more than three days after accepting the loan to cancel it.
NAFCU's Shea expressed similar concerns and also said consumers should be required to disclose in writing that a loan will be used to finance post-secondary education, not just verbally.
Both trade associations are supportive of changes in the reporting requirements that require federally insured credit unions to submit reports through a Web-based system, but both made suggestions for fine tuning the program, which is supposed to take effect in the third quarter of 2009.
CUNA Regulatory Research Counsel Luke Martone wrote that his association wants the NCUA to provide additional training to credit unions and possibly delay the implementation by a few months to ensure that credit union staffs understand the new system. CUNA also wants the agency to clarify what kind of security analysis credit unions must perform to ensure the safety of data.
NAFCU Associate Director of Regulatory Affairs Tessema Tefferi said the agency should perform a "substantive review" of the data that credit unions are required to submit to ease their regulatory burden.
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