Mortgage Originations at CUs Up 30 Percent in 2019

S&P Global Market Intelligence is reporting that mortgage originations at credit unions was up almost 30 percent in 2019.

According to Home Mortgage Disclosure Data, credit union originated $177.3 billion in home mortgages in 2019. This was up from approximately $137 billion in 2018.

However, credit union market share of mortgages slipped from 6.9 percent in 2018 to 6.7 percent in 2019.

Navy Federal Credit Union (Vienna, VA) was the top credit union mortgage originator in 2019 funding $19.78 billion in mortgages. This was up 20.3 percent from the prior year. Navy FCU is the 19th largest mortgage lender in 2019.

Read more.

CUSO Allegedly Hacked

CU Today is reporting that a credit union service organization (CUSO), CU Collections based in Manassas, Virginia, was allegedly hacked by by a criminal organization called Maze.

The alleged data breach was reported by security firm Emsisoft to CU Today.

The stolen sensitive member information included home addresses, Social Security numbers, work and cell phone numbers, and member numbers, as well as other information in the collection files.

CU Today wrote that the company did not comment on the alleged data breach.

Currently, the National Credit Union Administration (NCUA) does not have the authority to examine third party vendors.

This alleged hack of sensitive member data at a third party vendor shows why the NCUA needs to be added to the Bank Service Company Act.

Read more.

Student CU Connect CUSO Settles with CFPB over ITT Private Student Loan Program

The Consumer Financial Protection Bureau (CFPB) on June 14 announced a settlement with Student CU Connect CUSO, LLC (CUSO), a company set up to hold and manage private loans for students at ITT Technical Institute.

Student CU Connect CUSO is headquartered in Overland Park, Kansas.

In a complaint, the CFPB alleged that the CUSO provided substantial assistance to ITT Educational Services, Inc. in engaging in unfair acts and practices.

Under the terms of the proposed stipulated judgment, CUSO must stop collecting on all outstanding CUSO loans, discharge all outstanding CUSO loans, and ask all consumer reporting agencies to which CUSO furnished information to delete tradelines relating to CUSO loans. The order also requires CUSO to provide notice to all consumers with outstanding CUSO loans that their debt has been discharged and is no longer owed and that CUSO is seeking to have the relevant tradelines deleted. The total amount of loan forgiveness is currently estimated to be $168 million.

Forty-four states plus the District of Columbia have also settled with CUSO today on the same terms.

Read the complaint.

Read the settlement.

CU Organizations Agree to Pay $7.5 Million to Settle ITT Student Loan Nightmare

Credit union organizations agreed to a motion to settle claims with ITT Technical Institute bankruptcy trustee.

As part of the settlement agreement, credit union organizations will pay almost $7.5 million.

The credit union organizations covered by the motion include Student CU Connect CUSO, LLC, The Rochdale Group, Inc., Elements Financial Federal Credit Union (formerly known as Eli Lilly Federal Credit Union), Bellco Credit Union, Credit Union of America, Directions Credit Union, Veridian Credit Union, Workers Credit Union and CommunityAmerica Credit Union.

Also, Student CU Connect CUSO will have an allowed general unsecured claim in the amount of $127,844,857, which constitutes a 15 percent reduction of the amount claimed by the CUSO.

Read the motion.

Read the Indianapolis Business Journal article.

Michigan Regulator Approves CUSO to Provide Trust Services

The Michigan Department of Insurance and Financial Services granted regulatory approval to the formation of limited purpose bank, Credit Union Trust, to provide trust services to credit union members.

Credit Union Trust plans to open late in the first quarter of 2019 and will be headquartered in Farmington Hills, Michigan.

Credit Union Trust will operate as both a credit union service organization (CUSO) and a Michigan limited purpose bank.

Prior to a 2016 change in Michigan law, credit unions could not directly offer fiduciary services.

The organizers of the CUSO are seven credit unions -- Alpena Alcona Area Credit Union (Alpena, MI), Community Choice Credit Union (Farmington Hills, MI), ELGA Credit Union (Burton, MI), Frankenmuth Credit Union (Frankenmuth, MI), Honor Credit Union (Berrien Springs, MI), Members First Credit Union (Midland, MI), and Team One Credit Union (Saginaw, MI).

Read more.

McWatters Makes Legislative Recommendations

National Credit Union Administration (NCUA) Chairman McWatters on October 2 in testimony before the Senate Banking Committee recommended four legislative priorities for the agency.

The four areas involve modification of provisions related to field of membership, granting the NCUA vendor authority, authorizing alternative forms of capital, and giving the NCUA Board broader authority to establish a maximum loan rate ceiling for federal credit unions.

Field of Membership

• NCUA is recommending that all types of federally chartered credit unions, not just multiple common bond charters, be allowed to add underserved areas to their fields of membership. 
• NCUA urges Congress to consider allowing federal credit unions to serve underserved areas without also requiring those areas to be local communities. 
• NCUA recommend that Congress simplify or remove the “facilities” test for determining if an area is underserved. 
•  Congress consider eliminating the Federal Credit Union Act’s requirement that a multiple common-bond credit union be within “reasonable proximity” of the location of a group to provide services to members of that group.
• Congress should grant explicit authority for web-based communities as a basis for a credit union charter. 
• Congress should consider providing greater flexibility for low-income individuals to join federal credit unions. Specifically, NCUA believes that Congress revise the Federal Credit Union Act to allow the NCUA to permit federal credit unions to add anyone residing in a census tract where current projections indicate he or she qualifies as low-income.

Vendor Authority

The NCUA is requesting that Congress consider legislation to provide the agency with examination and enforcement authority over certain third-party vendors — including credit union service organizations (CUSOs).

Currently, the NCUA may only examine CUSOs and third-party vendors with their permission and cannot enforce any necessary corrective actions or share the results of a voluntary review with customer credit unions of the third-party vendor. This lack of vendor authority stands in contrast to the powers of the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and most state regulators.

In making his case for the authority to examine third-party vendors, McWatters noted that the top five technology service providers serve more than half of all credit unions, representing 92 percent of the credit union system’s assets. Data from the fourth quarter of 2017 show that credit unions using the services of a CUSO accounted for $1.375 trillion in assets or 99.7 percent of the system’s assets.

He also stted that a failure of even one of these vendors represents significant potential risk to the Share Insurance Fund. For example, since 2008, CUSOs have caused more than $500 million in losses to federally insured credit unions, and they have contributed to the failure of 11 credit unions.

Alternative Forms of Capital

Under the Federal Credit Union Act, only low-income credit unions are able to include secondary capital (a form of alternative capital) in the calculation of their statutory net worth ratio. NCUA wants Congress to authorize alternative forms of capital that would count towards the statutory net worth ratio of a credit union without a low-income designation.

Maximum Interest Rate Ceiling on Loans

Federal credit unions are currently subject to a statutory usury rate on loans. The NCUA Board is seeking broader authority to establish a maximum loan rate ceiling for federal credit unions based on financial criteria and for periods as the NCUA Board may determine. McWatters believes this would dramatically simplify the administration of interest rate changes and make it much easier for credit unions to comply.

However, McWatters' testimony does not address reforming the National Credit Union Share Insurance Fund. It also fails to make any recommendations regarding the Central Liquidity Facility.

Read the testimony.

PenFed Acquires Ad Agency

Pentagon Federal Credit Union (Tyson, VA) last week announced that it had acquired a Washington-area advertising agency, WHITE64.

The advertising agency led the rebranding of Pentagon Federal Credit Union to PenFed, and launched the PenFed “Great Rates Across America” campaign.

Under the terms of the agreement, WHITE64 will retain its name and operate as a virtually autonomous unit rather than an in-house agency. The price tag of the deal was not disclosed.

Under regulations governing a credit union service organization (CUSO), the National Credit Union Administration (NCUA) designated marketing services as a pre-approved power.

The agency will continue to serve its existing customers, including Washington Metro, Koons Automotive Group, and Luray Caverns. WHITE64 will also look at expanding its clientele and will provide marketing services to other credit unions.

But according to regulation, a CUSO must primarily serve credit unions, its membership, or the membership of credit unions contracting with the CUSO. It is unclear how NCUA will enforce this provision, since it has failed to define primarily.

In addition, the agency will be structured as a limited liability company. This means the income from its operations would be taxed at PenFed's tax rate. In other words, the income from the ad agency will not be taxed.

In conclusion, marketing services are unrelated to a federal credit union's tax exempt purpose. Policymakers should require federal credit unions be treated like other tax exempt organizations and pay taxes on income from unrelated business activities.

Read the press release.

myCUmortgage Consent Order

The Massachusetts Division of Banks alleged that myCUmortgage (Beavercreek, OH), a credit union service organization (CUSO), had engaged in unlicensed mortgage lending activity prior to obtaining the appropriate license from the state.

According to the July 18 consent order, myCUmortgage

• will pay an administrative penalty of $60,000;
• shall establish, implement and maintain policies and procedures to ensure that the Company refrains from engaging in any business activity that requires approval or licensure from the Division unless and until it obtains the appropriate license or approval from the Commissioner of Banks;
• must establish, implement, and maintain policies and procedures to ensure that all applicable personnel receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised policies and procedures implemented pursuant to this Consent Order; and
• will implement all corrective actions identified in the October 12, 2017 Report of Examination.

The order states that if myCUmortgage fails to comply with the terms of the consent order, the CUSO could see the suspension and/or revocation of its license, or other formal regulatory approval.

Read the consent order.

Regulator: Third-Party Risk Management Is A Heightened Supervisory Focus

A bank regulator recently warned that managing third-party risk is a heightened supervisory focus.

The Office of the Comptroller of the Currency (OCC) in its Semiannual Risk Perspective report identified increasing use of third-party service providers and the concentration of critical operations among few service providers as operational concerns.

The report notes a growth in partnerships between banks (you can substitute the term credit unions) and third-party companies or vendors. Financial institutions are becoming more reliant upon third-party financial technology companies for new emerging products and services. This is driving third-party risk.

The report also noted that consolidation -- both among banks and among third-party service providers -- has “increased reliance on a smaller group of third parties providing critical applications and resulted in large numbers of banks, especially community banks, relying on a small number of service providers.”

The report found "instances of concentration of third-party service providers for specialized services, such as merchant card processing, denial-of-service mitigation, ... and other specific product or market service."

This concentration in a limited number of third-party service providers could result in systemic risk in the financial services sector.

The OCC advised that banks address third-party risk "through appropriate due diligence and ongoing oversight."

This should be the same advice to credit unions from the National Credit Union Administration (NCUA), as NCUA does not have the authority to examine third-party service providers, unlike other federal banking regulators.

Credit Unions Fund $112.6 Million Biofuel Loan

A consortium of credit unions funded a $112.6 million loan guaranteed by the United States Department of Agriculture to Ryze Renewables Reno, LLC.

The loan will help support the construction of a biorefinery in Storey County, Nevada.

The loan is the largest to date funded by the USDA Rural Development Biorefinery, Renewable Chemical and Bio based Product Manufacturing Assistance Program.

CU Capital Market Solutions (CMS), an Atlanta-based credit union service organization (CUSO), was the lead loan participation agent for the deal. The loan will be serviced by Greater Commercial Lending, a CUSO owned by the $825 million Greater Nevada Credit Union (Carson City, NV).

Jefferson Financial Federal Credit Union (Metarie, LA) was part of the credit union consortium. In 2017, Jefferson Financial received an injection of $12 million in secondary capital.

Given the size of the loan, this loan should be subject to the Shared National Credit program.

Read more.

Achieva CU Launches Bank Merger Consulting Service

Achieva Credit Union (Dunedin, FL) has launched a merger consulting service that would help larger credit unions buy smaller community banks.

The credit union service organization, Achieva Merger Services, hopes to make a profitable business out of telling credit unions of the merits behind buying smaller commercial banks, and urging banks to consider credit unions a rich new resource of potential buyers.

Services to be provided by Achieva Merger Services include identifying targets, due diligence, pricing analysis, merger applications, regulatory advice, acquisition accounting, and integration of operations and technologies.

Achieva CU purchased Calusa Bank in 2015 in a whole bank deal.

Read the story.

Taxi Medallion Loans Stress Two New Jersey Credit Unions

Taxi medallion loans continue to stress the performance of two New Jersey credit unions in the first quarter of 2017. Both credit unions owned credit union service organizations that financed taxi medallions.

First Jersey Credit Union

The increase in provisions for loan and lease losses caused First Jersey Credit Union (Wayne, NJ) to go from a profit of 82,404 in the first quarter of 2016 to a loss of $847, 040 at the end of the first quarter of 2017.

The credit union reported approximately $862 thousand in provisions for loan and lease losses as of March 31, 2017. A year earlier, the credit union did not report any provisions for loan and lease losses.

First Jersey Credit Union reported a year-over-year reduction in its net worth due to large losses. The credit union's net worth fell from almost $12.4 million to slightly less than $7.2 million. As a result, the credit union's net worth ratio declined by 263 basis points over the last year to 6.44 percent as of March 31, 2017. The credit union currently meets the requirement of being adequately capitalized.

At the end of March 31, 2017, almost $4.1 million in delinquent loans, of which $1.9 million were member business loans (MBL). Early delinquencies (30 to 59 days past due) were $4.6 million, of which $3.1 million are MBLs.

However, the delinquency rate fell from last quarter and from one year ago. At the end of March 31, 2017, the delinquency rate was 5.80 percent compared to 7.82 percent at the end of 2016 and 8.71 percent from a year ago.

Member business loans 60 days or more delinquent was 14.43 percent -- down from 28.57 percent a year earlier. However, there was little change in the 30 day plus delinquency rate for business loans over the last year. Almost one-third of all business loans are 30 days or past due.

Troubled debt restructured business loans increased by 86 percent over the last year to almost $2.9 million.

First Jersey had $2 million in foreclosed and repossessed other assets as of March 31, 217 -- up from zero a year ago.

The credit union has a total buffer of net worth and allowances for loan and lease losses of $11.7 million to absorb expected and unexpected losses at the end of March 2017.

Aspire Federal Credit Union

Aspire Federal Credit Union (Wayne, NJ) reported a loss of $519,386 during the first quarter of 2017. In comparison, the credit union recorded a quarterly loss of $93,723 one year earlier.

The first quarter 2017 loss was partly due to the credit union setting aside $884,357 in provisions for loan and lease losses.

As a result of a 2016 loss of $1.6 million and a first quarter loss of $519 thousand, the credit union's net worth fell from slightly more than $19 million to $17 million. The credit union's net worth ratio fell by 34 basis points over the prior year to 9.81 percent as of March 2017.

Year-over-year loans 60 days or more past due were up by almost $1 million to just below $5.7 million. Early delinquencies were up about $327 thousand to $5.85 million.

The percentage of loans 60 days or more past due were up from last year; but down from the previous quarter. The delinquency rate as of March 2017 was 4.16 percent, down from 5.18 percent as of the end of 2016 and up from 3.09 percent from a year ago.

The credit union reported that $2.6 million in business loans were 60 days or more past due. Early delinquencies for business loans were $3.15 million. Almost one-third of Aspire's business loans were 30 days or more delinquent and 14.96 percent of business loans were 60 days or more past due.

Outstanding troubled debt restructured business loans were $4.3 million as of March 31, 2017.

The credit union reported as of March 31, 2017 foreclosed and repossessed other assets, presumably taxi medallion loans, were almost $1.9 million -- up over 900 percent from a year ago.

The credit union has a combined net worth and loan loss reserve buffer of $21.7 million to absorb expected and unexpected losses.

CUSO Gives LICUs Access to Hot Institutional Money

A credit union service organization (CUSO), CU Capital Market Soultions, is providing low-income designated credit unions (LICUs) with access to the institutional cash market by utilizing the National Credit Union Administration (NCUA) pass-through insurance regulations.

LICUs can receive non-member funding up to 20 percent of their liabilities.

For example, Jefferson Financial Credit Union (Metairie, LA) received the first non-member deposit of $5 million on August 8th through the CUSO's non-member deposit program. The CUSO packaged together 20 institutional deposits of $250,000 each.

This does raise several policy issues about hot wholesale money.

Does the exposure to hot money increase the liquidity risk at LICUs?

Hot money tends to fuel more rapid asset growth. What is the National Credit Union Administration (NCUA) doing to limit the risk posed by rapid asset growth fueled by hot money to the National Credit Union Share Insurance Fund (NCUSIF)?

Should credit unions that are more reliant on hot money pay higher insurance premiums than other credit unions? This would require that Congress needs to reform the NCUSIF.

What is NCUA doing to ensure credit unions using this CUSO's program have the appropriate asset-liability management policies with respect to hot money?

Finally, should institutional money be the recipient of a taxpayer subsidy?

NCUA Discloses Info on CUSOs

The National Credit Union Administration (NCUA) published metrics regarding approximately 900 credit union service organizations (CUSOs).

"CUSOs at a Glance" fact sheet includes information on credit union investments and loans to CUSOs, the percentage of CUSOs wholly-owned, the number of credit unions CUSOs serve, and the types of services CUSOs provide.

According to the fact sheet,

• CUSOs reported more than $1.3 billion in investments from credit unions.
• CUSOs reported more than $447 million in loans from credit unions.
• A majority, 74 percent, of CUSOs were wholly owned by a credit union, with only five CUSOs reporting more than 100 credit union owners. One CUSO reported having more than 1,000 credit union owners.
• The majority, 95 percent, of CUSOs serve less than 100 credit union customers, with 67 percent of CUSOs serving only one credit union customer.
• The top four CUSO services are lending, member services, other services, and payment and electronic transaction processing.

Fact Sheet.

Investigative Report Examines Quorum's Relationship to Vacation Ownership Interest Company

In a follow up story on Diamond Resorts International, the Southern Investigative Reporting Foundation examines the relationship of Diamond Resorts International, a vacation ownership interest business, and Quorum Federal Credit Union (Purchase, NY).

The investigative report notes that Quorum Federal Credit Union has become a major lender to Diamond Resorts International. Quorum is also financing other vacation ownership interest companies.

Diamond Resorts International has entered into a $100 million loan facility agreement with Quorum FCU through the end of 2017. At the end of 2015, Diamond Resorts International represents 27 percent of Quorum's vacation ownership loans.

A former Quorum official told Southern Investigative Reporting Foundation that Diamond seemed to send its riskier loans to the credit union. Many of the loans went to applicants with credit scores below 660.

The article further points out that Quorum partnered with Diamond and other vacation ownership interest businesses to grow its membership.

According to the report, an association was used to qualify people for membership, who were seeking a timeshare loan from Quorum. When Quorum approved the loan, Diamond Resorts International purportedly deposited $25 in the borrowers savings account.

In addition, the report examines the relationship of Quorum with its credit union service organization, Vacation Ownership Funding Corporation, Inc. (VOFCO). Quorum owns 79 percent of VOFCO.

The article cites Quorum's 2015 annual report that the National Credit Union Administration is scrutinizing Quorum's Vacation Ownership Loan Program and may require Quorum to divest a large portion of its timeshare loans.

Read the report.

CUSOs Fuel Michigan CUs Business Lending Growth

Credit union service organizations (CUSOs) have played a key role in growing business lending at Michigan's credit unions, according to an article in Crain's Detroit Business.

The article notes that Ann Arbor-based Michigan Business Alliance (MBA), which is a CUSO, does underwriting and portfolio management on behalf of some 36 credit unions around the state. MBA started modestly, with a loan portfolio of $3.2 million at the end of 2004, and grew that to $423 million at the end of 2014 and $460 million at the end of last year. MBA stated that its commercial lending sweet spot are loans of $50,000 to $5 million.

Another CUSO, Troy-based Commercial Alliance LLC, has booked commercial loans of $46.3 million in 2011 and serviced a portfolio of $179.7 million. In 2015, it booked commercial loans of $156 million and serviced a portfolio of $388.7 million for 135 credit unions in the state. The CUSO has booked $39 million in loans with two weeks left in the first quarter.

The growth of commercial lending at CUSOs is a potential vulnerability for the credit union industry as the National Credit Union Administration does not have the power to examine third party service providers.

Read the story.

Medallion Loans Affect Performance of First Jersey and Quorum

It appears that taxi medallion loans are beginning to weigh on the performance of First Jersey Credit Union (Wayne, NJ) and Quorum Federal Credit Union (Purchase, NY), according to the credit unions' 4th quarter Call Report.

First Jersey Credit Union

First Jersey Credit Union reported a 2015 loss of almost $2.7 million. The 2015 loss arose from an increase in provision for loan losses. Loan loss provisions for 2015 was approximately $3.1 million -- up from almost $1.4 million for 2014.

As a result of the 2015 loss, the credit union's net worth ratio fell 125 basis points during the year to 8.54 percent at the end of 2015.

The credit union in its most recent Call Report had almost $3.9 million in delinquent loans or 4.5 percent of all loans are 60 days or more past due. However, business loans disproportionately represent delinquent loans.

First Jersey is reporting almost 18.5 million in business loans, of which $16,3 million are commercial loans. Presumably, most of the these commercial loans were for tax medallions.

At the end of 2015, $1.45 million in business loans were 60 days or more past due. This means 7.83 percent of all business loans were past due. In addition, early delinquencies (30 days to 59 days past due) were $3 million. In other words, almost a quarter of all business loans were at least 30 days past due.

First Jersey also wholly owns USA Medallion Funding LLC, a credit union service organization (CUSO) that specializes in medallion lending. At the end of 2015, First Jersey has slightly more than $2 million invested in the CUSO.

At the end of 2015, First Jersey is reporting loan loss reserves of slightly less than $3 million -- up from $1.1 million a year earlier. The credit union's net worth was almost $12.3 million at the end of 2015. This means the credit union has a combined buffer of almost $15.3 million for both expected and unexpected losses.

First Jersey management needs to disclose to its members its total exposure to taxi medallion loans, including the exposure of its wholly owned CUSO.

Quorum Federal Credit Union

Quorum Federal Credit Union reported at the end of 2014 the credit union held $78.4 million in taxi participation loans. Taxi participation loans are collateralized by taxi medallions, primarily in the cities of Philadelphia, New York, Boston, and Chicago. The Credit Union owns a percentage of each loan, primarily between 80 percent and 90 percent.

Quorum reported that delinquent loans increased from $8.3 million at the end of 2014 to $21 million at the end of 2015. At the end of 2015, 2.57 percent of its loans were 60 days or more past due compared to 1.13 percent a year earlier.

However, these delinquencies are disproportionately in participation loans. Total participation loans were $127.8 million and delinquent participation loans were $10.4 million. Presumably, the delinquent loans are connected with taxi participation loans; but we will need to wait for the credit union's 2015 Annual Report for more details as the Call Report lacks sufficient granularity.

According to the credit union's Financial Performance Report, the delinquency rate on participation loans went from 0 percent on December 2014 to 8.17 percent as of the end of 2015. In addition, there were $2 million in participation loans that were between 30 days and 59 days past due.

Quorum reported provisions for loan and lease losses of $7.9 million for 2015 -- this is up from $4.7 million for 2014. This increase in provisioning caused the credit union's loan loss reserves to increase from $6.1 million at the end of 2014 to $7.7 million at the end of 2015.

However, delinquent loans grew at a faster rate than allowances for loan losses. Quorum reported a coverage ratio (allowances for loan losses to delinquent loans) at the end of 2015 of 36.79 percent -- down from 73.57 percent a year earlier.

The credit union has total net worth of $72.2 million.

This indicates that Quorum has a combined buffer of almost $80 million to absorb anticipated and unanticipated losses.

NCUA's Supervisory Priorities for 2016

The National Credit Union Administration (NCUA) issued a letter to federally insured credit unions regarding its supervisory priorities for 2016.

The letter is intended to assist credit unions in preparing for their next NCUA examination.

NCUA noted that field staff will focus on the following issues this year: cyber-security, Bank Secrecy Act compliance, interest rate risk, TILA-RESPA integrated disclosure rule, credit union service organization reporting, and incident response procedures regarding unauthorized access to members information.

Read the letter.

Virginia Credit Union Realty CUSO Launches Division to Serve Nonmembers

A credit union service organization owned by Virginia Credit Union (Richmond, VA), Virginia CU Realty, has launched a new division, Virginia Select Realty, to serve nonmembers.

Read more.

Third Party Vendors Remain a Regulatory Blind Spot

In an August 6 letter to nine consumer groups that requested that National Credit Union Administration (NCUA) investigate credit unions and credit union service organizations that participated in predatory student loans with ITT Educational Services, NCUA Chairman Matz wrote that NCUA does not have enforcement authority over credit union service organizations or third party vendors. (See the following blog post here)

As background, 7 credit unions purchased loans from ITT Education Services, the Rochdale Group, and Student CU Connect. A majority these loans ended in default. The seven credit unions that had participated in a lending program ceased purchasing these loans in 2012 after a three-year contract expired at NCUA's instigation.

This inability of NCUA to examine third party vendors remains a regulatory blind spot. As this letter to the nine consumer groups highlights, third party vendors pose a potential risk to credit unions.

While NCUA is seeking authority to supervise third party vendors, the Credit Union National Association (CUNA) is actively opposing this authority.

The latest example of CUNA's opposition is an August 5 letter to Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Harry Reid (D-NV) opposing an amendment introduced by Senator Warren to the Cybersecurity Information Sharing Act (CISA), which would grant NCUA additional authority to supervise third party vendors. The Warren amendment was not included in the list of amendments that will be debated by the Senate, when it considers CISA.

The failure to include this amendment maintains a regulatory blind spot regarding third party vendors that solely serve credit unions.

Perhaps the Consumer Financial Protection Bureau should step in, where NCUA cannot, to fill this regulatory void and begin to examine these third party vendors to credit unions.