WASHINGTON-CUNA said last week it will not support NCUA's proposed new regulations for CUSOs.
The trade group is calling on the agency to either withdraw the proposal or to "substantially revise" it.
NCUA proposed regulation is part of a broader effort to gain greater oversight over third parties with which credit unions do business or in which they have an ownership stake. But in a comment letter from SVP and Deputy General Counsel Mary Dunn, CUNA said credit unions are "extremely concerned" over the plan.
"NCUA already has a number of options it can employ to ensure credit unions do not get into trouble by participating in a CUSO without having to adopt the CUSO oversight provisions in the proposal," Dunn wrote in the letter.
Among the points CUNA made in its comment letter to NCUA:
• Credit unions must already engage in reasonable due diligence regarding their CUSOs and examiners should check to make certain they do so and that they are receiving the information and accountability from their CUSOs that they need to make sure there are no material problems, the trade group said.
• Examiners should also be reviewing 5300 reports and other documents from the credit union regarding its involvement with its CUSO, CUNA wrote.
• CUNA said it has questions over NCUA's legal authority to oversee CUSOs directly as it seeks to do under the proposal.
• Rather than adopt those provisions, CUNA told NCUA it should work with credit unions to help ensure they are fulfilling due diligence requirements and work with examiners to ensure they are vigilant to any problems by using existing supervisory authority.
"CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the National Credit Union Share Insurance Fund (NCUSIF)," Dunn said. "One of the major concerns with the proposal is that the agency has provided absolutely no data or analysis regarding current problems that could be used to substantiate the need for the proposal."
CUNA said it is aware that some CUSOs have had "issues" and even "serious problems, primarily with lending operations," but "rather than issuing a new proposed regulation that is tailored to address only identified problem areas, NCUA is proposing to issue a comprehensive regulation that is perceived by many in the credit union movement as an attempt to stifle CUSOs. We urge the agency to target its amendments to demonstrated problem areas. That is an approach credit unions would likely support."
CUNA also expressed what it said are "important agency budget implications associated with this proposal."
"If NCUA is more involved with CUSO regulation and examination, we can foresee that additional agency staff resources would be provided to perform those tasks - costs that credit unions will have to bear," CUNA said. "Further, to the extent that CUSOs allow credit unions to develop products, there is a real concern that examiners, who will focus exclusively on minimizing if not eliminating risk, will limit the ability of CUSOs to help credit unions initiate innovative products and delivery systems."
