Samantha: Hello, this is Samantha Shares.
This episode covers N C U A Board Member Todd Harper Statement on the
Decision to Curtail the Collection of Overdraft and Non-sufficient Fund Fees
The following is an audio version of that Statement This podcast is
educational and is not legal advice.
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And now the Statement.
N C U A Board Member Todd Harper issued the following statement about the agencyâs
decision to curtail the collection of total overdraft and non-sufficient
fund (NSF) fees for federally insured credit unions with more than $1
billion in assets beginning with Call Reports for the first quarter of 2025.
For markets to work efficiently, transparency is needed.
Thatâs a bedrock principle of economics.
And, itâs one of the many reasons why credit union member-owners and the
public should have clear visibility into the income a credit union
generates from overdraft and NSF fees charged to its member-owners.
To advance credit union efforts to benchmark fees against other financial
institutions, improve marketplace competition, and increase consumer
understanding of the fees theyâre charged within the credit union system, the N
C U A required federally insured credit unions with more than $1 billion in
assets to disclose, separately, income from overdraft and NSF fees beginning
with the 2024 first quarter Call Report.
With todayâs release of the 2024 fourth quarter Call Report results,
however, that desirable transparency experiment will regrettably end.
During the last year, weâve found that reporting institutions have collected $3.8
billion in such fees.
Some charged no fees at all.
For most reporting credit unions, overdraft and NSF fees accounted for
between 2 and 5 percent of revenue.
Some outliers charged fees amounting to as much as 18 percent of income.
For those billion-dollar-plus credit unions with higher overdraft and NSF
fees, we also found that they did not use those fees to subsidize better
interest rates or lower other fees.
Federally insured banks with more than $1 billion in assets began
reporting these numbers in 2015.
Since then, consumers have benefitted as banks have lowered
their reliance on such fees.
In fact, the Consumer Financial Protection Bureau found that roughly two out of
three banks with $10 billion or more in assets have eliminated NSF fees,
saving consumers $2 billion annually.
Yet, among credit unions with greater than $10 billion in assets, four out
of five continue to charge NSF fees.
That overreliance on such fees is one of the many reasons why the N
C U A began collecting and publicly reporting this data on Call Reports.
But, by unilateral action by the Chairman, credit union member-owners
and the public will now no longer have access to this important information.
If credit unions are to live up to their statutory purpose of supporting the
financial needs of âpeople of modest means and the credit union movementâs oft-touted
âpeople-helping-peopleâ philosophy, then credit union member-owners should
have access to this basic market information, so they can make better
decisions about how and where to deposit and access their hard-earned money.
While the N C U A will no longer publish overdraft and NSF fee income
for individual credit unions on a real-time quarterly basis, the
agency will instead collect the data during supervisory examinations.
This approach, however, will likely shield credit union members from
accessing the information through the Freedom of Information Act.
Ultimately, this non-disclosure will result in financial exclusion,
especially when one considers that NSF is a fee for not paying for an item.
In my view, the N C U A should restore fee transparency for overdraft
and NSF fees on Call Reports.
If the Chairman is unwilling to reverse course, then the overdraft and NSF fee
data collected in the exam process at individual credit unions shouldnât be
shielded from public release through the Freedom of Information Act.
If such data was once already public information, why
now sweep it under the rug?
The Chairman also noted that the appropriateness of overdrafts and NSF
fees charged is a matter between a credit union and its member-owners.
If those member-owners ultimately determine how their credit union is
run, then credit union management should make their overdraft and NSF
income upon member-owner request.
As a steward of the credit union system and someone whose father and grandfather
started credit unions, I strongly believe in the concept of a credit
union movement to lift up everyone.
But, this unnecessary decision moves that credit union movement closer to
an industry, one thatâs worse than banks when it comes to fee disclosures.
Profiting from consumersâ problems will come back and bite you.
Americaâs credit union member-owners deserve better.
This concludes the statement.
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This is Samantha Shares and we Thank you for listening.