WEBVTT NOTE This file was generated by Descript 00:00:00.460 --> 00:00:02.420 Samantha: Hello, this is Samantha Shares. 00:00:03.110 --> 00:00:06.070 This episode covers NCUA Vice Chairman Kyle S. 00:00:06.410 --> 00:00:11.460 Hauptman delivers remarks at the 2024 ACU Congressional Caucus in Washington, D.C. 00:00:12.179 --> 00:00:15.879 The following is an audio version of that advisory and the press release. 00:00:16.459 --> 00:00:19.639 This podcast is educational and is not legal advice. 00:00:20.059 --> 00:00:24.059 We are sponsored by Credit Union Exam Solutions Incorporated, whose 00:00:24.059 --> 00:00:27.159 team has over two hundred and Forty years of National Credit 00:00:27.159 --> 00:00:29.029 Union Administration experience. 00:00:29.499 --> 00:00:33.179 We assist our clients with N C U A so they save time and money. 00:00:33.679 --> 00:00:37.639 If you are worried about a recent, upcoming or in process N C U A 00:00:37.639 --> 00:00:42.009 examination, reach out to learn how they can assist at Mark Treichel DOT COM. 00:00:42.539 --> 00:00:46.889 Also check out our other podcast called With Flying Colors where we provide tips 00:00:46.889 --> 00:00:49.459 on how to achieve success with N C U A. 00:00:50.198 --> 00:00:51.288 And now the remarks. 00:00:51.998 --> 00:00:53.758 NCUA Vice Chairman Kyle S. 00:00:54.178 --> 00:00:59.328 Hauptman delivers remarks at the 2024 ACU Congressional Caucus in Washington, D.C. 00:01:00.057 --> 00:01:03.357 As Prepared for Delivery on September 9, 2024 00:01:04.142 --> 00:01:05.392 Good morning and thank you. 00:01:05.972 --> 00:01:07.762 This conference is one of my favorites. 00:01:08.222 --> 00:01:11.912 One reason I’m here is to get ideas on how I should focus the remaining 00:01:11.912 --> 00:01:13.472 days I have left in this job. 00:01:14.112 --> 00:01:16.762 Around this time next year, the White House will likely 00:01:16.762 --> 00:01:18.122 announce a new Board Member. 00:01:18.672 --> 00:01:22.312 That’s because my term on the NCUA Board ends next August, so 00:01:22.312 --> 00:01:23.802 I have less than a year left. 00:01:24.312 --> 00:01:26.852 Whew, I was worried that would be an applause line. 00:01:27.587 --> 00:01:30.957 That’s part of my message today: that what ACU does matters, 00:01:31.037 --> 00:01:32.507 that your advocacy matters. 00:01:33.067 --> 00:01:36.887 Here’s an example of a small, yet useful improvement that was entirely 00:01:36.887 --> 00:01:40.987 because of people in this hotel today; we’re revising our records retention 00:01:40.987 --> 00:01:44.897 policies, so you don’t feel compelled to keep records from decades ago. 00:01:45.597 --> 00:01:49.587 It all started with a call I had with CUNA’s Small Credit Union Committee. 00:01:49.877 --> 00:01:53.607 They mentioned credit unions that had boxes from 40 years ago because 00:01:53.607 --> 00:01:56.797 they were concerned the NCUA might someday ask for something from back 00:01:56.797 --> 00:02:00.707 then, all because the NCUA had never put any kind of limit on how many 00:02:00.707 --> 00:02:02.627 years of information we can require. 00:02:03.197 --> 00:02:07.317 I saw photos of storage units, piled high with clearly ancient papers, 00:02:07.557 --> 00:02:09.757 printed on that old dot-matrix paper. 00:02:10.197 --> 00:02:12.957 Remember those with the perforated sides with little holes? 00:02:13.317 --> 00:02:16.357 I had to look it up, that’s called ‘continuous feed’ paper. 00:02:16.807 --> 00:02:19.887 So, in April we put out an Advanced Notice of Proposed 00:02:19.887 --> 00:02:21.967 Rulemaking, and help is on the way. 00:02:22.710 --> 00:02:25.510 Again, all because I was in a meeting with folks like you. 00:02:26.050 --> 00:02:29.400 I’m very aware that the only people who think compliance is easy are 00:02:29.400 --> 00:02:30.700 those that don’t have to do it. 00:02:31.340 --> 00:02:35.850 Other agencies normally do have a limit on records retention, like the SEC requires 00:02:35.850 --> 00:02:37.710 records from the last seven years. 00:02:38.240 --> 00:02:41.660 The IRS only audits tax returns in the past three years 00:02:41.660 --> 00:02:43.080 after the return is filed. 00:02:43.550 --> 00:02:47.540 So, the upshot here is that you’re off the hook on your 2019 taxes. 00:02:48.242 --> 00:02:52.832 But seriously, your advocacy created real tangible results, that’s the message. 00:02:53.282 --> 00:02:57.512 Those storage units of old records may have continued being piled full of boxes 00:02:57.512 --> 00:03:01.612 for years to come, but instead someone brought the situation to our attention. 00:03:02.032 --> 00:03:05.022 It wasn’t controversial either, all three Board Members 00:03:05.022 --> 00:03:06.882 immediately agreed on what to do. 00:03:07.352 --> 00:03:10.162 We just needed someone like you to send a photo, to tell 00:03:10.162 --> 00:03:11.642 us what is actually happening. 00:03:12.372 --> 00:03:16.002 And in America, you deserve protection from an overbearing government. 00:03:16.682 --> 00:03:20.232 The same reason there’s a statute of limitations for being prosecuted. 00:03:20.642 --> 00:03:24.812 So, if we at the NCUA find ourselves wanting records from 1994 that’s 00:03:24.812 --> 00:03:27.912 our problem, not yours, because government should have to face 00:03:27.912 --> 00:03:29.822 deadlines and accountability as well. 00:03:30.282 --> 00:03:33.952 And speaking of protecting us from government: regarding what are labeled 00:03:33.952 --> 00:03:38.022 as junk fees, I’ve never seen a credit card late fee or an overdraft 00:03:38.022 --> 00:03:41.532 fee that comes anywhere close to what governments themselves charge. 00:03:42.231 --> 00:03:45.181 Now, I want to address an issue that has been a topic of much 00:03:45.181 --> 00:03:49.351 discussion recently: the potential impact of limiting non-sufficient 00:03:49.351 --> 00:03:51.451 funds (NSF) and overdraft fees. 00:03:51.921 --> 00:03:56.071 I was, and am, opposed to the NCUA’s new policy of forcing credit unions 00:03:56.071 --> 00:04:00.441 larger than $1 billion to publicly state their revenue from those sources. 00:04:00.811 --> 00:04:04.881 If NCUA or other agencies ‘get over their skis’ and interfere in the 00:04:04.881 --> 00:04:08.941 private financial affairs of credit unions and their members, the resulting 00:04:08.941 --> 00:04:13.321 credit union use of NSF and overdraft services could have the paradoxical 00:04:13.321 --> 00:04:17.521 effect of limiting access to financial services for those who need it most. 00:04:18.244 --> 00:04:22.574 Most importantly, America’s more than140 million credit union members 00:04:22.614 --> 00:04:24.414 know their lives better than we do. 00:04:24.854 --> 00:04:28.064 And removing overdraft often results in the consumer paying much 00:04:28.064 --> 00:04:30.014 higher fees and treated much worse. 00:04:30.584 --> 00:04:33.114 The ultimate irony here is that governments always 00:04:33.114 --> 00:04:34.424 charge the highest fees. 00:04:34.904 --> 00:04:39.374 Governments often have coercive powers far beyond any financial institution. 00:04:39.754 --> 00:04:43.194 Late child support payments mean no shared custody of children. 00:04:43.534 --> 00:04:47.704 Cars with a boot because of late parking tickets come with late fees that exceed 00:04:47.704 --> 00:04:50.054 any bank or credit union in this country. 00:04:50.584 --> 00:04:54.254 People have had my experience, of trying to get to work and their car is either 00:04:54.254 --> 00:04:58.474 towed because of late registration fees or booted due to unpaid tickets. 00:04:58.934 --> 00:05:02.844 Some of those people thus committed parole violations because they were late to work. 00:05:03.434 --> 00:05:06.284 This stuff is often avoided via overdraft fees. 00:05:06.684 --> 00:05:12.394 Paying a $30 overdraft fee is better than the $1,200 fee for filing taxes late. 00:05:13.134 --> 00:05:17.634 For many credit union members, overdraft protection and the ability to occasionally 00:05:17.634 --> 00:05:21.954 rely on NSF services are not just conveniences — they are essential tools 00:05:21.954 --> 00:05:23.794 that help them manage their finances. 00:05:24.344 --> 00:05:27.484 Eliminating these options could drive some members away from credit 00:05:27.484 --> 00:05:32.184 unions and towards less regulated, higher-cost financial service providers. 00:05:32.654 --> 00:05:37.164 In essence, by restricting these services, we may inadvertently push consumers into 00:05:37.164 --> 00:05:41.224 riskier and more expensive financial arrangements, reducing financial 00:05:41.224 --> 00:05:43.134 inclusion rather than enhancing it. 00:05:43.891 --> 00:05:45.751 It's crucial that we strike a balance. 00:05:46.381 --> 00:05:50.491 Our regulatory framework should protect consumers from predatory practices 00:05:50.541 --> 00:05:54.361 without depriving them of the financial tools they need to navigate their lives. 00:05:54.871 --> 00:05:58.691 You can tell it’s an issue I’m passionate about, and I appreciate your attention. 00:05:59.281 --> 00:06:03.241 But the consequences of well-intentioned government are too painful to ignore. 00:06:03.741 --> 00:06:07.671 And the victims of overbearing government are rarely the elites, but rather 00:06:07.671 --> 00:06:11.151 the ‘people of modest means’ that credit unions are supposed to serve. 00:06:11.960 --> 00:06:15.950 There is a well-intentioned movement aimed at protecting consumers from excessive 00:06:15.950 --> 00:06:18.130 fees, which is something we all support. 00:06:18.500 --> 00:06:20.030 I’ve paid those fees myself. 00:06:20.470 --> 00:06:21.300 It’s not fun. 00:06:21.700 --> 00:06:24.960 However, we must also consider the unintended consequences 00:06:24.960 --> 00:06:26.230 of such regulations. 00:06:26.750 --> 00:06:30.980 I think we all get the point here: paying fees isn’t fun, but for millions 00:06:30.980 --> 00:06:32.810 of people it’s the better option. 00:06:33.444 --> 00:06:36.774 Make no mistake: I personally don’t want to pay nor charge 00:06:36.774 --> 00:06:38.984 anyone overdraft or NSF fees. 00:06:39.594 --> 00:06:43.514 And there are ways to reduce the number of situations that result in those fees. 00:06:44.054 --> 00:06:48.904 Faster, real-time 24/7 payments would help a lot; this exists all 00:06:48.904 --> 00:06:50.514 over the world but not in the U.S. 00:06:50.514 --> 00:06:53.924 Financial literacy and savings programs can also help reduce 00:06:53.924 --> 00:06:55.504 the sting of overdraft fees. 00:06:56.134 --> 00:06:59.354 I’m not on the side of anyone charging stiff overdraft fees. 00:06:59.904 --> 00:07:03.674 I’m saying we need to be aware of what happens when NCUA or CFPB 00:07:03.674 --> 00:07:05.654 interferes in people’s private lives. 00:07:06.154 --> 00:07:10.114 We know there are beneficiaries of these misguided policies; the policies 00:07:10.114 --> 00:07:12.024 wouldn’t exist if no one benefited. 00:07:12.514 --> 00:07:15.434 But who benefits from government attempts at price controls? 00:07:16.077 --> 00:07:19.927 And finally, before we get to Q&A, I want to mention two fascinating 00:07:19.927 --> 00:07:23.907 new technologies that we often hear about: Artificial intelligence, 00:07:24.007 --> 00:07:27.507 and blockchain and digital assets, which includes cryptocurrency. 00:07:28.067 --> 00:07:31.327 I’ve made clear that the NCUA shouldn’t be a technophobic agency. 00:07:31.847 --> 00:07:36.197 We at the NCUA are already exploring ways to use AI for fraud detection, 00:07:36.307 --> 00:07:40.767 discussion boards for examiners, and ultimately an external-facing customer 00:07:40.767 --> 00:07:42.667 service chat for credit unions. 00:07:43.237 --> 00:07:45.777 We already use AI to scan Call Reports. 00:07:46.496 --> 00:07:50.176 As for digital assets, stablecoins are already changing America’s 00:07:50.176 --> 00:07:54.356 creaky payments system, especially for international payments, as well 00:07:54.356 --> 00:07:57.566 as providing loan opportunities with the easiest-to-foreclose-on 00:07:57.566 --> 00:07:59.026 collateral you can imagine. 00:07:59.536 --> 00:08:03.826 My main point here is that credit unions have always evolved with new technology; 00:08:04.266 --> 00:08:07.886 they were early users of ATMs and then the internet and mobile banking. 00:08:08.356 --> 00:08:12.336 It’s important that we at the NCUA understand that innovation is necessary. 00:08:12.646 --> 00:08:17.566 I had a reporter ask me, “Aren’t you nervous about being pro-AI and pro-crypto, 00:08:17.916 --> 00:08:21.986 and do you worry about the problems they may cause?” I replied, “Do I worry 00:08:21.986 --> 00:08:24.036 there might be problems, be downsides? 00:08:24.396 --> 00:08:25.376 I know there will be.” 00:08:26.227 --> 00:08:29.377 Every new, widespread technology comes with downsides. 00:08:29.837 --> 00:08:33.037 Did you know that there zero car crashes before we had cars? 00:08:33.607 --> 00:08:35.697 Yet, none of us arrived here on a horse. 00:08:36.197 --> 00:08:39.417 For that matter, I’ve been asked about crypto’s reputation in some 00:08:39.417 --> 00:08:41.457 circles as being used by criminals. 00:08:42.017 --> 00:08:45.767 Well, if you think crypto is often used for illicit purposes, you’re going to 00:08:45.767 --> 00:08:47.657 freak out when you hear about cash. 00:08:48.392 --> 00:08:52.492 That is to say, my true north is making sure credit unions don’t go the way 00:08:52.492 --> 00:08:56.002 of Blockbuster video because their regulator wouldn’t let them compete. 00:08:56.502 --> 00:08:57.522 Thank you for having me. 00:08:58.275 --> 00:09:00.855 This concludes NCUA Vice Chairman Kyle S. 00:09:01.325 --> 00:09:06.455 Hauptman delivers remarks at the 2024 ACU Congressional Caucus in Washington, D.C. 00:09:07.171 --> 00:09:11.461 If your Credit union could use assistance with your exam, reach out to Mark Treichel 00:09:11.461 --> 00:09:14.091 on LinkedIn, or at mark Treichel dot com. 00:09:14.651 --> 00:09:17.321 This is Samantha Shares and we Thank you for listening.