When CU Times broke the news that theCFPB issued a bulletin warning banks and credit unions that ifthey fail to meet accuracy obligations when reporting negativeaccount histories to credit reporting companies, the result couldbe bureau action, readers had plenty to say.

The bulletin stated banks and credit unions must have systems inplace to ensure accuracy when they pass on information, such asnegative account histories, to checking account reporting or othercredit reporting companies.

“The Consumer Financial Protection Bureau is in a uniqueposition to make a difference in improving how the checking accountreporting system actually works,” Cordray said. “We are the onlyfederal financial regulator with the authority to supervise boththe larger depository institutions and the larger consumerreporting agencies for compliance with federal consumer financiallaw. Thus we can consider and address these issues comprehensively,engaging directly with both sets of industry participants.”

Readers were quick to point out the potential challenges createdby the latest bulletin and discussions turned to whether the CFPB'sauthority was too overreaching.

Here's a look at what readers had to say online and across oursocial media channels:

CFPB to Credit Unions:Checking Reporting on Our Radar: Director Cordray says FIsmay face bureau action if they do not report accurate accountinformation to credit reporting companies.

I have worked for 3 different credit unions over my career. Notone of them, or the dozens where I know other execs, ever tries toreport anything other than accurate information. This just one moreexample of the CFPB's ever expanding search for a non-existentproblem where it hopes to find one poor institution and slap itwith a huge fine.Given today's news about discrimination within theCFPB maybe Director Cordray should spend some time looking insidehis building.

~BillyBobJim

Well said BillyBobJim! The CFPB needs to back down and quittrying to protect consumers from themselves. Consumers need to beeducated and be able to balance their finances. This agency isgoing to put so much burden on institutions, it will eventuallyaffect smaller organizations. Our CU would never intentionallyreport inaccurate information. It could happen, but neverintentionally…

~Scott G

I have worked at a credit union for 21 years. We have extremelylow fees of $8 for overdrafts and have tried to help many memberswho can't seem to handle a checking account. The point is they needto want the help and put forth the effort. Past history is a greatindicator of behavior and should be reported accurately. Consumersalready have the right to dispute anything that may be inaccuratein their credit and they continue to dispute things that arecorrectly reported, trying to clean up messes they created, noterrors made by financial institutions. Consumers don't likeconsequences even if their own actions have created them. There arestill benefits of having a savings account, which we will alwaysoffer unless the member causes a loss to us. Some services &privileges should not be available to members who cannot handle achecking account. That decision is often good for the consumer.

~Lesley

Cordray says “Consumers should not be sidelined out of the basicbanking services they need because of the flaws and limitations ina murky system,”.Murky?What a clown. Is this the best we can do inthis country?

~Greg

8 Checking AccountsThat Don't Overdraft: Check out no-overdraft accountbenefits, terms and fees offered by these financialinstitutions.

Interesting read, but I did notice that many of these FI's areBig Banks that makes millions in fee income every year. Lucky them,they can offer one product that might not generate income. Onething they are missing is personal service. As a very tiny creditunion with one location, we attract members that need to be'coddled' a bit more than a bank can handle. We have many membersthat still do not use a computer. We have members who stop byseveral times a week to chat about their lives and get financialadvice. We give loans to members with low FICO scores and we havemany members that have 'just a debit card', but we are not a 'live'credit union. We still process in daily batches. This means theycan use that card at the grocery store, then drive down to thecredit union and take all that cash out. When the transaction hitsthe next morning, the money is gone. If they opt-out, we stillcan't charge them any kind of fee. They weren't denied at point ofsale, because the money was there at that time. How is this ourfault again? I guess I should just be grateful that we have such aloyal group of members who have decided that knowing us as well aswe know them is more important than having all the latest, greatestgadgets and products out there.

~Ellen Drollette

Cordray ClarifiesCFPB Overdraft Intentions : During an NCUA-hostedwebinar, Richard Cordray says the bureau wants credit unions tooffer members more options.

Maybe the CFPB should consider that the source of the problemisn't just in the products, but the education behind using theproducts. Should financial institutions make available productsthat don't take advantage of the consumers/members? Absolutely.Should the users of these products have a basic understanding ofhow money works? Basic logic says yes. Sadly, I feel that the CFPBwould say it doesn't matter. Treat the source of the problem, don'tput a Band-Aid over it.

~David Murphy

By the way, an account can go negative because the memberdeposits a bad check and removes the funds before the NSF depositreturns to the credit union. And NSF fees on checks/ACH debits cantake the account negative. If CFPB limits fees on courtesy pay,then the limit is placed on NSF fees because of Reg Z. Cordray didnot understand that yesterday when asked.

~JustAPlayer

Since when does he feel it isn't his place to overrule Congress?Cordray is running his own little fiefdom and promoting his ownanti-business agenda. This has nothing to do with protectingconsumers and, in fact, most of his rule making has hurt consumersby limiting choice and eliminating competition. The CFPB must goaway. I can't wait until a new administration comes in and sendshim back into the real world.

~BillyBobJim

Would someone please explain to me what a checking account thatcan't go into the negative is? If you don't allow it to go into thenegative, then doesn't that mean you return checks? If you returnthem, the member gets hit with a huge fee from the payee andpossible legal action. I understand a prepaid card that doesn'twork when you run out of loaded funds, but once you give a member abox of checks, they can keep on writing them with or without money.Just looking for a little clarification on this.

~Ellen Drollette

Ellen, here's an example: http://www.cutimes.com/2014/12… This is the sort of thingCordray would like offered to consumers as an option. I realizeyour credit union may not be able to offer it, but at this pointit's only a suggestion. If it became a rule, your asset class wouldprobably be exempted. I'm sure the CFPB would like your feedback onthat!

~Heather Anderson

I think this type of card is a great idea Heather! When I was incollege I saw countless friends overdraft and struggle with thefees. Great option for young people.

~BrandonHord

I agree Brandon. It would not only be helpful for students, butalso for anyone who struggles to earn enough to cover his/herexpenses, or for freelancers who don't get paid on a regularbasis.

~Heather Anderson

We already offer this. They still overdraft because theelectronic payments hit and there is no money in the account. Whatam I missing?

~Ellen Drollette

A prepaid debit card. Great from CFPB perspective. Lousy fromFinCEN perspective. Unless you have strict controls on depositinginto account. My CU only allows the employer to put in funds.Limits AML issues. I really don't want to be in the middle of aCFPB v FinCEN battle.

~JustAPlayer

Electronic payments can still bounce if there is no money in theaccount.

~Ellen Drollette

Ellen Townsend BrownBecause an overdraft without some sort of fee is an interest freeloan. Is that fair?

Mary Babst VedrosExactly!

Credit Union TimesCredit unions shouldn't have to provide free overdrafts. However,members have been asking for accounts that don't go negative. Ithink if credit unions were to offer an account that only allowedreal time, instant approval access and didn't go negative, it wouldbe popular.

Tammy Doles-RobertsIsn't there a law that you aren't supposed to write checks whenthere are no funds to back it up? The fee is “just” and if youdon't write or promise payments for funds you don't have you wontpay a fee-problem solved.

Credit Union TimesIf it's such a weighty legal violation, why allow it? Given thepopularity of debit cards, ACH and other electronic transactionsthat require balance approval, credit unions should even have totake that risk. Young members don't use or want to use checks.They'd rather be denied at POS than pay an overdraft fee. Why notoffer that as an option? Members are happy and credit union risk isreduced. I don't understand why that's so difficult. Please tell mewhat I'm missing because other financial services providers alreadyoffer it and are stealing CU market share.

Jason Ford Balancinga check book isn't algebra. It's 2nd grade math.

Candice Reed I love this. My CU charges $27. Ishould feel lucky.

SarahSnell Cooke My credit union offers a line of credit tiedto your checking account, and charges something like 7% interest soif you use it for a couple of weeks it's only a few pennies to themember. Also it only covers checks not point of sale, however youcan transfer funds from the LOC before exceeding your funds. Ithink it's a very reasonable system.

David LeNoirSr. This is such a simple solution–are you sitting down?If you want to borrow money from your credit union–and can't waitfor an approval to do so–just write a check and pay $25 for theconvenience. If you don't want to borrow the money, just put yourdebit card or checkbook away until you have the available funds. Beresponsible. You choose–it is not someone else's fault that youchose to borrow the money. If you give a dance, you have to pay theband.

Thought provoking, but shorton solutions.

Rich Losea

Every one should pay their owe way. People of modest means don'twant a subsidy, they want a fair shake. Many people have lefttraditional financial services relationships because the wereabused! This is both a bank and credit union problem. Withtechnology the group of people who have be force to a refused to bebanked category and are not prey for check cashers and moneylenders should be brought back to the financial services industryby offering idiot proof relationships that don't penalize peoplefor an inability to balance a checking account. The technologypresently is here where checks can be cashed and put into anaccount with online debit to prevent overdraft. Bill pay wouldreduce fund available immediately on authorization. The greatesthypocrisy in the modern credit union industry is their commitmentto improve the lives of people of modest means. The technology isout there with very few credit unions attempting to adopt it.

Bill Brooks

Credit unions by their very nature are built on subsidizing. Inthe old days, the borrowers subsidized everyone. The spread onloans and shares was sufficient to cover expenses. (Remembersingle-rate financing before risk-based lending?) That hasn't beentrue for some time. So… now we play the fee game. In today'smarket, it it impossible to fee members for the services everyoneelse is providing for free. Enter “the marketplace”. In today'smarketplace, fees for overdrafts cover more than 100% of netincome. Funny, thing though, it's all in the member to control.Believe it or not, most members don't balance their checkbooks(with all the auto-debits/credits and two folks hitting the debitcard and no one sharing their purchases — is it any wonder?). Theycan control their behavior, not the cu. You want to buck themarketplace? Who's your merger partner?! You're going down if youdon't fee. And, no one wants to go back to the old way before O/D.How bad was that?!

Gregg Stockdale

Isn't it the members who overdraft that cover the hefty expenseof offering checking accounts to those who do not??

Mina Worthington

Ms. Anderson stirs the Inequality pot, yet offers no concretesuggestions on how CU's should solve a social problem of haves andhave-nots with a reinvented credit union business model.

Rich Losea

Most of those that use Courtesy Pay / Overdraft Protection, knowthe costs involved and accept the fee for the temporary use ofthose funds. It does avoid the double-fee hit (and embarassment) ofa bounced check, but too often I see members going into CourtesyPay multiple times per pay period. It is meant as a Courtesy foroccasional use – not something to borrow from whenever wanted. The$30 penalty does not seem to deter behavior.

Michael Torcisi, MBA

Totally agree Michael T! Consumers love OD programs and wouldrather pay the fee than write a bad check at the localmerchant.

Molly Snody

The issue is not overdrafts but how the programs are perceived,I have always voiced the opinion that this is a service based on acredit decision and not a fee system. A person wanting overdraftprotection should be scored as an unsecured loan. That is what aninstitution is providing for the customer or member. The charge isthe cost of providing the advance to them.

Tommy Loo

A major concern for many CEOs will be how do they increase theirincome to offset the HUGE loss in fee income. Most CU's can't makeit on spread anymore. If you think there are a lot of mergers now,wait until the CFPB cracks down on courtesy pay.

Gregory Shaver

Technology has taken away theability of any credit union to establish its own prices (interestrates on loans, dividend rates on shares) as consumers can use anyfinancial organization for those services. Now, the unsecuredclosed-end loans are being undermined by online lenders who canapprove loans immediately and fund within 2-4 days (without theregulatory scrutiny that banks/credit unions have). In theimmediate future, we will have an unelected, unaccountablebureaucrat deem that a paid NSF fee is no longer allowed (and whoknows if the unpaid NSF fee will be permitted). There goes theability to provide an quick, efficient service that consumers canchoose to have on their accounts without additional paperwork ortime delays. How are CUs supposed to do the things demanded (suchas money laundering prevention using expensive software) bygovernment without the ability to earn money to pay for it?

~JustAPlayer

Like most things, the answer lies between two extremes probably.CUs could offer lower fees, however that is simply a bandaidsolution to a far deeper systemic issue in the United State: everdecreasing financial literacy.

I think the answer lies less with eliminating fees, and morewith CUs and community banks working with youth in and out ofschools to increase basic levels of financial literacy. Simply put,kids aren't coming out of high school (or even college in manycases) with the ability to balance checkbooks, maintain a budget,and understand basic financial terms like interest, collateral, oroverdraft, and as champions of the community, CUs can be doingbetter!

~Brandon Hord

Although commenters are understandably focused upon theoverdraft aspects of the CFPB's focus, the reality is that theonerous compliance burden from the CFPB's zero tolerance for FairCredit Reporting Act errors will be the most significant outcomefrom the interfering federal agency's ideological foray into thefinancial services deposit account marketplace. I quote CFPBDirector Richard Cordray – “Today we are issuing a bulletin warningbanks and credit unions that they must meet their legal obligationto have appropriate systems in place with respect to accuracy whenthey report information, such as negative account histories, to theconsumer reporting agencies.” Translate that to mean “costly andcomplex compliance systems.”

~Marvin Umholtz

I was a poor college student with a checking account. And aftercollege, I didn't make big money, so I was definitely “workingpoor”. However, I didn't bounce any checks. It's not really rocketscience; you just don't write checks/use debit for things you don'thave the money in your account to cover. It's a punitive fee thatcan be entirely avoided.

Being poor has less to do with these fees than beingirresponsible. There are many members with lower income levels thatmanage their checking accounts year-after-year without bouncingchecks/over drafting.

So what does the world of banking look like If the CFPB severelylimits or eliminates ODP/NSF income? Clearly, credit unions andbanks will be forced to look for other sources of income to make upfor what NIM does not cover . And that income will likely not comefrom behavioral based fees, which can be avoided, but from acrossthe board fees that hit everyone.

Just speculating on what it could look like, but much higherinterest rates on loans and lower rates on savings (to helpincrease NIM), no more free checking accounts, fees for usingservices that have typically been free for everyone (like mobilebanking, online banking, bill pay, debit cards, etc.) would all bepossible/likely. Staffing cuts/branch closings will probably benecessary as an expense reduction, so service will take severalsteps back.

And all of this for what? To try and protect a segment of ourpopulation that is unwilling to change their behavior and continueto make bad choices? Or just another form of incomeredistribution?

~Responsibility1

CFPB=(expletive deleted); highly-partisan, still-controversial,and probably-unconstitutional

~Marvin Umholtz

Heather –This is a real dilemma, especially for credit unions. I agree with,and wholeheartedly support, your message about coming up withcreative ways to help members in this area. However, the financialreality for credit unions dictates otherwise, which you did note inyour article, but let's throw some hard numbers at it to reinforcethe magnitude of the challenge being faced.

In 2014, fee income for federally insured credit unions was $7.2billion. In that same year, net income was almost $8.8 billion. Inother words, fee income represented 82% of credit union net income— eighty two percent. Fee income was 90% of net income in 2013 and87% in 2012.

Any reduction in fee income without an offsetting reduction inexpense, would stifle the credit union industry's ability to grow,make investments in technology to maintain relevance, and offsetthe increasing cost of compliance.

Is this a cop-out for not seeking solutions? Of course not, butwhen there is not enough income from margin to cover operatingcosts, provision expense and capital needs, you have to get it fromsomewhere else. It's the hard reality credit unions face.Regulation that reduces the opportunity for credit unions togenerate income is a very real threat to their long term existenceas they currently operate today.

https://www.ncua.gov/DataApps/…

~Mike Higgins

Mike, I disagree. OD fees have been easy money for too manyCU's. Instead of looking for other ways to make income, CU's justfeed at the overdraft fee trough. If we are supposed to be the“good guys” then use some common sense of OD's. I know way too manyCU's that have members using OD as a form of payday lending.

~BillyBobJim

BBJ — I share your sentiment about OD. We are actually on thesame team here. However, if OD gets regulated away or reduced, thenthe alternative is loan sharks, which is not a better choice formembers.

~ Mike Higgins

Thank you for the comment, Mike. I definitely appreciate yourpoint. I would rather see fees in exchange for value, not feesassessed punitively. For example, I'd pay a fee for mobile deposit.Some credit unions are also making good fee income selling ads tobusiness members that display in their mobile apps. An ad for alocal hardware store would pop up in the mobile app of a member whohas a transaction history of purchasing items at Home Depot. I lovethis idea – what a win-win!

~Heather Anderson

Heather — Agreed. There are two options here: alternativesources of revenue or more efficient operations (or both). On therevenue side, there is a place for behavior modification income,but the value proposition is doing it for less than the market atlarge. You noted the difference between $29 and $30 is not much ofa value proposition. In addition to the ad revenue you noted,credit unions could look at insurance products, including cyberinsurance, wealth management, etc. — anything that does not pull oncapital.

Building on BBJ's comments, credit unions that are piling up anexcessive amount net worth via OD income really have an obligationto return some of it back to their members. I don't like to seethat form of profit taking any more than anyone else does.

I still am concerned about it being regulated away. Creditunions are not the only ones looking for other sources of income,so are banks. It's a very competitive landscape out there.

~Mike Higgins

I have a friend who has run multiple credit unions. When askedabout fees, she stated “every fee on our fee schedule can beavoided.” Overdraft fees – either for “courtesy pay” or NSF – canbe avoided. If you don't have the money, don't write the check oruse the card or set up the ACH payment. Simple premise. Besides,overdrafting on debit cards requires the consumer's approval. Don'twant that – then don't approve the service. At the credit unions Iwork(ed) for, if you don't want check/ACH courtesy pay and tell us,you won't get it. Just the NSF fee when we send that payment backto the depositing entity or ACH creator. Why is it theresponsibility of the financial institution to create another newproduct – with the programming AND disclosure language not tomention the expense – just because people think they have all themoney to cover whatever they want when they know how much goes intothe account on payday?

~ JustAPlayer

I think it's the responsibility of any “financial cooperative”to thoroughly educate consumers on their choices and the impacts oftheir choices. When it comes to financial literacy, Credit unionscan do a much better job. Ideally, they should collectively find away to 'help” the 47 million Americans that live in poverty. Noeasy task.

~bclagett