Hauptman Blasts NCUA Overdraft, NSF Fee Disclosure Plan
Vice chairman said the new policy will backfire
National Credit Union Administration Vice Chairman Kyle Hauptman on Wednesday blasted the agency’s decision to publicly disclose how much credit unions with more than $1 billion in assets earn from overdraft and non-sufficient funds fees.
Speaking at May’s monthly board meeting, Hauptman, the board’s lone Republican, said the new policy never was discussed at an agency board meeting, adding that he is constantly being asked why the agency adopted the new policy.
“My answers are, I wish the NCUA was not doing this – especially on such short notice – and finally yes, I do realize how harmful it is to consumers,” he said.
Board Chairman Todd Harper announced the new policy during a February presentation at the Brookings Institution.
Hauptman said he first learned of the new requirements in January. He accused the NCUA of providing incentives to credit unions to avoid serving low-income people. “This policy is very clear: don’t serve the underserved,” he said.
He argued that the NCUA’s new requirement is intended to pressure overdraft and NSF fees downward.
The vice chairman said he has made suggestions about ways to make the plan “less damaging.” For instance, he said he suggested that the data could be collected in a way that would make it available to agency examiners. Then the NCUA could release aggregate data rather than data for individual credit unions.
“We could also listen to those pleading for adequate time to prepare, and not publish the data until next year, especially since it’s been harder than expected to figure out what numbers are to be used for each category,” he said. “All my ideas were rejected. Credit unions will now face reputational risk for data that neither the NCUA nor the credit union knows to be correct.”
Harper did not have the opportunity to respond to Hauptman’s comments, since he is on temporary leave while having and recovering from back surgery.
The Biden Administration has been attacking businesses for imposing “junk fees,” such as surcharges for tickets to sporting events, as well as credit card and overdraft fees. Democratic board member Tanya Otsuka defended the new policy during Thursday’s meeting. “The public, the members, have the right to know about this income,” she said. “This is important for member-owners.
In other business Wednesday, agency staff reported that the NCUA’s equity ratio stands at 1.24%--well below the agency’s 1.33% normal operating level. The low level was attributed to projected share growth.
Following the meeting, the agency announced that its June meeting is cancelled.