Samantha: Hello, this is Samantha Shares.
This episode covers NCUA Vice Chairman Kyle S.
Hauptman delivers remarks at the 2024 ACU Congressional Caucus in Washington, D.C.
The following is an audio version of that advisory and the press release.
This podcast is educational and is not legal advice.
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And now the remarks.
NCUA Vice Chairman Kyle S.
Hauptman delivers remarks at the 2024 ACU Congressional Caucus in Washington, D.C.
As Prepared for Delivery on September 9, 2024
Good morning and thank you.
This conference is one of my favorites.
One reason Iâm here is to get ideas on how I should focus the remaining
days I have left in this job.
Around this time next year, the White House will likely
announce a new Board Member.
Thatâs because my term on the NCUA Board ends next August, so
I have less than a year left.
Whew, I was worried that would be an applause line.
Thatâs part of my message today: that what ACU does matters,
that your advocacy matters.
Hereâs an example of a small, yet useful improvement that was entirely
because of people in this hotel today; weâre revising our records retention
policies, so you donât feel compelled to keep records from decades ago.
It all started with a call I had with CUNAâs Small Credit Union Committee.
They mentioned credit unions that had boxes from 40 years ago because
they were concerned the NCUA might someday ask for something from back
then, all because the NCUA had never put any kind of limit on how many
years of information we can require.
I saw photos of storage units, piled high with clearly ancient papers,
printed on that old dot-matrix paper.
Remember those with the perforated sides with little holes?
I had to look it up, thatâs called âcontinuous feedâ paper.
So, in April we put out an Advanced Notice of Proposed
Rulemaking, and help is on the way.
Again, all because I was in a meeting with folks like you.
Iâm very aware that the only people who think compliance is easy are
those that donât have to do it.
Other agencies normally do have a limit on records retention, like the SEC requires
records from the last seven years.
The IRS only audits tax returns in the past three years
after the return is filed.
So, the upshot here is that youâre off the hook on your 2019 taxes.
But seriously, your advocacy created real tangible results, thatâs the message.
Those storage units of old records may have continued being piled full of boxes
for years to come, but instead someone brought the situation to our attention.
It wasnât controversial either, all three Board Members
immediately agreed on what to do.
We just needed someone like you to send a photo, to tell
us what is actually happening.
And in America, you deserve protection from an overbearing government.
The same reason thereâs a statute of limitations for being prosecuted.
So, if we at the NCUA find ourselves wanting records from 1994 thatâs
our problem, not yours, because government should have to face
deadlines and accountability as well.
And speaking of protecting us from government: regarding what are labeled
as junk fees, Iâve never seen a credit card late fee or an overdraft
fee that comes anywhere close to what governments themselves charge.
Now, I want to address an issue that has been a topic of much
discussion recently: the potential impact of limiting non-sufficient
funds (NSF) and overdraft fees.
I was, and am, opposed to the NCUAâs new policy of forcing credit unions
larger than $1 billion to publicly state their revenue from those sources.
If NCUA or other agencies âget over their skisâ and interfere in the
private financial affairs of credit unions and their members, the resulting
credit union use of NSF and overdraft services could have the paradoxical
effect of limiting access to financial services for those who need it most.
Most importantly, Americaâs more than140 million credit union members
know their lives better than we do.
And removing overdraft often results in the consumer paying much
higher fees and treated much worse.
The ultimate irony here is that governments always
charge the highest fees.
Governments often have coercive powers far beyond any financial institution.
Late child support payments mean no shared custody of children.
Cars with a boot because of late parking tickets come with late fees that exceed
any bank or credit union in this country.
People have had my experience, of trying to get to work and their car is either
towed because of late registration fees or booted due to unpaid tickets.
Some of those people thus committed parole violations because they were late to work.
This stuff is often avoided via overdraft fees.
Paying a $30 overdraft fee is better than the $1,200 fee for filing taxes late.
For many credit union members, overdraft protection and the ability to occasionally
rely on NSF services are not just conveniences â they are essential tools
that help them manage their finances.
Eliminating these options could drive some members away from credit
unions and towards less regulated, higher-cost financial service providers.
In essence, by restricting these services, we may inadvertently push consumers into
riskier and more expensive financial arrangements, reducing financial
inclusion rather than enhancing it.
It's crucial that we strike a balance.
Our regulatory framework should protect consumers from predatory practices
without depriving them of the financial tools they need to navigate their lives.
You can tell itâs an issue Iâm passionate about, and I appreciate your attention.
But the consequences of well-intentioned government are too painful to ignore.
And the victims of overbearing government are rarely the elites, but rather
the âpeople of modest meansâ that credit unions are supposed to serve.
There is a well-intentioned movement aimed at protecting consumers from excessive
fees, which is something we all support.
Iâve paid those fees myself.
Itâs not fun.
However, we must also consider the unintended consequences
of such regulations.
I think we all get the point here: paying fees isnât fun, but for millions
of people itâs the better option.
Make no mistake: I personally donât want to pay nor charge
anyone overdraft or NSF fees.
And there are ways to reduce the number of situations that result in those fees.
Faster, real-time 24/7 payments would help a lot; this exists all
over the world but not in the U.S.
Financial literacy and savings programs can also help reduce
the sting of overdraft fees.
Iâm not on the side of anyone charging stiff overdraft fees.
Iâm saying we need to be aware of what happens when NCUA or CFPB
interferes in peopleâs private lives.
We know there are beneficiaries of these misguided policies; the policies
wouldnât exist if no one benefited.
But who benefits from government attempts at price controls?
And finally, before we get to Q&A, I want to mention two fascinating
new technologies that we often hear about: Artificial intelligence,
and blockchain and digital assets, which includes cryptocurrency.
Iâve made clear that the NCUA shouldnât be a technophobic agency.
We at the NCUA are already exploring ways to use AI for fraud detection,
discussion boards for examiners, and ultimately an external-facing customer
service chat for credit unions.
We already use AI to scan Call Reports.
As for digital assets, stablecoins are already changing Americaâs
creaky payments system, especially for international payments, as well
as providing loan opportunities with the easiest-to-foreclose-on
collateral you can imagine.
My main point here is that credit unions have always evolved with new technology;
they were early users of ATMs and then the internet and mobile banking.
Itâs important that we at the NCUA understand that innovation is necessary.
I had a reporter ask me, âArenât you nervous about being pro-AI and pro-crypto,
and do you worry about the problems they may cause?â I replied, âDo I worry
there might be problems, be downsides?
I know there will be.â
Every new, widespread technology comes with downsides.
Did you know that there zero car crashes before we had cars?
Yet, none of us arrived here on a horse.
For that matter, Iâve been asked about cryptoâs reputation in some
circles as being used by criminals.
Well, if you think crypto is often used for illicit purposes, youâre going to
freak out when you hear about cash.
That is to say, my true north is making sure credit unions donât go the way
of Blockbuster video because their regulator wouldnât let them compete.
Thank you for having me.
This concludes NCUA Vice Chairman Kyle S.
Hauptman delivers remarks at the 2024 ACU Congressional Caucus in Washington, D.C.
If your Credit union could use assistance with your exam, reach out to Mark Treichel
on LinkedIn, or at mark Treichel dot com.
This is Samantha Shares and we Thank you for listening.