WEBVTT NOTE This file was generated by Descript 00:00:00.470 --> 00:00:02.380 Samantha: Hello, this is Samantha Shares. 00:00:03.060 --> 00:00:07.000 This episode covers N C U A Board Member Todd Harper Statement on the 00:00:07.000 --> 00:00:11.450 Decision to Curtail the Collection of Overdraft and Non-sufficient Fund Fees 00:00:12.166 --> 00:00:15.656 The following is an audio version of that Statement This podcast is 00:00:15.656 --> 00:00:17.936 educational and is not legal advice. 00:00:18.446 --> 00:00:22.386 We are sponsored by Credit Union Exam Solutions Incorporated, whose 00:00:22.386 --> 00:00:25.446 team has over two hundred and Forty years of National Credit 00:00:25.476 --> 00:00:27.316 Union Administration experience. 00:00:27.796 --> 00:00:31.436 We assist our clients with N C U A so they save time and money. 00:00:31.806 --> 00:00:35.796 If you are worried about a recent, upcoming or in process N C U A 00:00:35.796 --> 00:00:40.116 examination, reach out to learn how they can assist at Mark Treichel DOT COM. 00:00:40.516 --> 00:00:44.866 Also check out our other podcast called With Flying Colors where we provide tips 00:00:44.866 --> 00:00:47.476 on how to achieve success with N C U A. 00:00:48.177 --> 00:00:49.097 And now the Statement. 00:00:49.898 --> 00:00:54.338 N C U A Board Member Todd Harper issued the following statement about the agency’s 00:00:54.338 --> 00:00:58.198 decision to curtail the collection of total overdraft and non-sufficient 00:00:58.198 --> 00:01:02.438 fund (NSF) fees for federally insured credit unions with more than $1 00:01:02.438 --> 00:01:07.208 billion in assets beginning with Call Reports for the first quarter of 2025. 00:01:08.109 --> 00:01:11.259 For markets to work efficiently, transparency is needed. 00:01:11.769 --> 00:01:13.949 That’s a bedrock principle of economics. 00:01:14.359 --> 00:01:17.949 And, it’s one of the many reasons why credit union member-owners and the 00:01:17.949 --> 00:01:21.579 public should have clear visibility into the income a credit union 00:01:21.579 --> 00:01:25.589 generates from overdraft and NSF fees charged to its member-owners. 00:01:26.343 --> 00:01:30.233 To advance credit union efforts to benchmark fees against other financial 00:01:30.233 --> 00:01:34.523 institutions, improve marketplace competition, and increase consumer 00:01:34.523 --> 00:01:38.573 understanding of the fees they’re charged within the credit union system, the N 00:01:38.663 --> 00:01:43.293 C U A required federally insured credit unions with more than $1 billion in 00:01:43.323 --> 00:01:48.173 assets to disclose, separately, income from overdraft and NSF fees beginning 00:01:48.173 --> 00:01:50.553 with the 2024 first quarter Call Report. 00:01:51.053 --> 00:01:54.953 With today’s release of the 2024 fourth quarter Call Report results, 00:01:55.033 --> 00:01:59.263 however, that desirable transparency experiment will regrettably end. 00:02:00.032 --> 00:02:04.502 During the last year, we’ve found that reporting institutions have collected $3.8 00:02:04.542 --> 00:02:06.292 billion in such fees. 00:02:06.662 --> 00:02:08.222 Some charged no fees at all. 00:02:08.692 --> 00:02:12.692 For most reporting credit unions, overdraft and NSF fees accounted for 00:02:12.692 --> 00:02:14.822 between 2 and 5 percent of revenue. 00:02:15.362 --> 00:02:19.412 Some outliers charged fees amounting to as much as 18 percent of income. 00:02:19.922 --> 00:02:23.962 For those billion-dollar-plus credit unions with higher overdraft and NSF 00:02:23.962 --> 00:02:28.282 fees, we also found that they did not use those fees to subsidize better 00:02:28.282 --> 00:02:30.352 interest rates or lower other fees. 00:02:31.101 --> 00:02:34.971 Federally insured banks with more than $1 billion in assets began 00:02:34.971 --> 00:02:36.991 reporting these numbers in 2015. 00:02:37.591 --> 00:02:40.551 Since then, consumers have benefitted as banks have lowered 00:02:40.551 --> 00:02:42.101 their reliance on such fees. 00:02:42.611 --> 00:02:46.551 In fact, the Consumer Financial Protection Bureau found that roughly two out of 00:02:46.551 --> 00:02:51.351 three banks with $10 billion or more in assets have eliminated NSF fees, 00:02:51.591 --> 00:02:54.111 saving consumers $2 billion annually. 00:02:54.751 --> 00:02:59.381 Yet, among credit unions with greater than $10 billion in assets, four out 00:02:59.381 --> 00:03:01.701 of five continue to charge NSF fees. 00:03:02.051 --> 00:03:05.581 That overreliance on such fees is one of the many reasons why the N 00:03:05.581 --> 00:03:09.961 C U A began collecting and publicly reporting this data on Call Reports. 00:03:10.699 --> 00:03:14.479 But, by unilateral action by the Chairman, credit union member-owners 00:03:14.629 --> 00:03:18.379 and the public will now no longer have access to this important information. 00:03:18.969 --> 00:03:22.659 If credit unions are to live up to their statutory purpose of supporting the 00:03:22.659 --> 00:03:27.979 financial needs of ‘people of modest means and the credit union movement’s oft-touted 00:03:27.979 --> 00:03:31.199 ‘people-helping-people’ philosophy, then credit union member-owners should 00:03:31.199 --> 00:03:35.029 have access to this basic market information, so they can make better 00:03:35.029 --> 00:03:39.189 decisions about how and where to deposit and access their hard-earned money. 00:03:39.946 --> 00:03:44.176 While the N C U A will no longer publish overdraft and NSF fee income 00:03:44.176 --> 00:03:48.186 for individual credit unions on a real-time quarterly basis, the 00:03:48.186 --> 00:03:52.016 agency will instead collect the data during supervisory examinations. 00:03:52.586 --> 00:03:56.016 This approach, however, will likely shield credit union members from 00:03:56.056 --> 00:03:59.256 accessing the information through the Freedom of Information Act. 00:03:59.746 --> 00:04:03.516 Ultimately, this non-disclosure will result in financial exclusion, 00:04:03.786 --> 00:04:08.106 especially when one considers that NSF is a fee for not paying for an item. 00:04:08.870 --> 00:04:13.060 In my view, the N C U A should restore fee transparency for overdraft 00:04:13.060 --> 00:04:15.070 and NSF fees on Call Reports. 00:04:15.700 --> 00:04:20.060 If the Chairman is unwilling to reverse course, then the overdraft and NSF fee 00:04:20.060 --> 00:04:24.170 data collected in the exam process at individual credit unions shouldn’t be 00:04:24.170 --> 00:04:27.480 shielded from public release through the Freedom of Information Act. 00:04:28.130 --> 00:04:31.330 If such data was once already public information, why 00:04:31.330 --> 00:04:32.710 now sweep it under the rug? 00:04:33.392 --> 00:04:36.982 The Chairman also noted that the appropriateness of overdrafts and NSF 00:04:36.982 --> 00:04:40.902 fees charged is a matter between a credit union and its member-owners. 00:04:41.342 --> 00:04:44.872 If those member-owners ultimately determine how their credit union is 00:04:44.872 --> 00:04:49.002 run, then credit union management should make their overdraft and NSF 00:04:49.032 --> 00:04:51.192 income upon member-owner request. 00:04:51.953 --> 00:04:55.963 As a steward of the credit union system and someone whose father and grandfather 00:04:55.963 --> 00:04:59.863 started credit unions, I strongly believe in the concept of a credit 00:04:59.863 --> 00:05:01.803 union movement to lift up everyone. 00:05:02.403 --> 00:05:06.353 But, this unnecessary decision moves that credit union movement closer to 00:05:06.353 --> 00:05:10.293 an industry, one that’s worse than banks when it comes to fee disclosures. 00:05:10.803 --> 00:05:13.863 Profiting from consumers’ problems will come back and bite you. 00:05:14.403 --> 00:05:17.363 America’s credit union member-owners deserve better. 00:05:18.093 --> 00:05:19.413 This concludes the statement. 00:05:20.185 --> 00:05:24.395 If your Credit union could use assistance with your exam, reach out to Mark Treichel 00:05:24.395 --> 00:05:27.095 on LinkedIn, or at mark Treichel dot com. 00:05:27.685 --> 00:05:30.275 This is Samantha Shares and we Thank you for listening.