Hauptman and Otsuka on NCUSIF Update & Call Report Changes

During the National Credit Union Administration’s (NCUA) May 22 board meeting (the first since Chair Todd Harper announced his temporary leave of absence), the board was briefed on the National Credit Union Share Insurance Fund’s (NCUSIF) status. Additionally, Vice Chair Kyle Hauptman addressed recent changes to the NCUA call report, which requires credit unions with assets of $1 billion or more to report overdraft and non-sufficient funds (NSF) fee income.

Hauptman mentioned his numerous discussions with credit unions and trade associations about these call report changes:

• The California and Nevada Credit Union Leagues had a detailed discussion with him during America’s Credit Unions’ Governmental Affairs Conference (GAC) this year. The Leagues have maintained contact with his office regarding concerns over this requirement.
• Hauptman disagrees with the NCUA’s approach to publishing the data and, instead of a repeal, suggested alternative methods to mitigate potential harm to credit unions and the NCUSIF. He proposed that, “The same data could be collected in a manner where it’s available to NCUA examiners and we only publish aggregate data. 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 also noted that he shared his concerns about the changes in the call report and specifically noted that the reputational risks would cause harm for credit unions. However, his suggestions and concerns were rejected.
• Hauptman also said the NCUA’s policy could discourage credit unions from offering essential services to their members, harming consumers who need them the most. He questioned the logic of supporting regulations that hinder serving low-income people while promoting financial inclusion. He criticized the additional regulatory burden without guaranteeing NCUSIF’s benefit. He noted that political beneficiaries and the news media, with “click-bait” articles, would gain from this policy.

Board Member Tanya Otsuka, sworn in January 2024, agreed that “the purpose of credit unions is to serve those of modest means”:

• Otsuka said she would “like to see more credit unions serve more low-income people, more underserved people, more people of modest means.” However, Otsuka indicated she has also “heard from a lot of consumers about excessive overdrafts, of overdrafting over and over and over again, pushing their account even further into the red.” She noted: “Our agency has a responsibility to make sure that those practices are not happening.”
• Otsuka said there is a need to understand data at both the institution and systemwide levels. She highlighted the importance of transparency for credit union members and the public, cautioning against prejudging or assuming narratives before analyzing the data in aggregate. “I want to emphasize that I think we should see what the lay of the land looks like, and I look forward to reviewing it to get a better sense of what it looks like from a safety and soundness perspective and from a consumer protection standpoint,” she said.

The Leagues commend Vice Chairman Hauptman’s remarks and appreciate the attention to concerns from California and Nevada credit unions. The Leagues will continue to work with the NCUA and other regulatory policymakers and legislators on the perception of overdraft and NSF fees, giving credit unions a voice in the state and national discussion.

You can view the NCUA board meeting here. If you have any questions, email Leagues Vice President of Regulatory Advocacy and Compliance Lisa Quaranta.