NCUA's Harper Says the Agency Lacks Rigor on Consumer Compliance

The National Credit Union Administration’s current method of examining and enforcing consumer protection laws and regulations for institutions with less than $10 billion in assets is “not comparable to our sister agencies,” NCUA Board Member Todd Harper said in a Washington speech on September 10. He noted that bank regulators conduct regular risk-focused consumer compliance exams and assign separate consumer compliance ratings.

“Decades ago, the NCUA conducted full consumer financial protection compliance reviews as part of its examination program, but the agency has increasingly focused on safety and soundness over time,” Harper said. “NCUA’s different approach to consumer financial protection reviews runs counter to the congressionally mandated mission of the Federal Financial Institutions Examination Council.”

Harper noted that more rigorous examination and enforcement of consumer compliance regulations could potentially address principal-agent issues at credit unions by aligning management’s actions with the best interests of members.

Harper also criticized the NCUA board’s recent vote to delay its 2015 risk-based capital rule, cautioning that without it, a potential economic downturn could amplify losses to the National Credit Union Share Insurance Fund. He added that he is concerned about the liquidity of federally insured credit unions.

Read the speech.