ALEXANDRIA, Va. — NCUA, seeking to keep credit unions out of the Obama administration's proposed consumer protection agency, proposed last week to create its own consumer office within the agency.
The NCUA proposal came as the White House was sending a bill to Congress that would establish a Consumer Financial Protection Agency that would have broad powers to develop, monitor and enforce regulations on all financial products like mortgages, savings, loans and investments. A number of agencies, including the Federal Reserve, Federal Trade Commission and the Securities and Exchange Commission and NCUA, currently monitor those products and services separately.
The new NCUA office would monitor compliance with mortgage laws, credit card rules, investments and regulations and disclosures on products and services sold by CUs, giving credence to the CU lobby's argument that they do not need a new agency.
Creating A 'Liaison Relationship' With Consumer Groups
"The new office will consolidate existing consumer protection functions already administered by NCUA and would create a liaison relationship with relevant external parties, such as the Consumer Financial Protection Agency, if that proposed entity becomes a reality," stated Chairman Fryzel, of President Obama's proposal.
"While NCUA has always placed a high priority on the enforcement of consumer regulations, and credit unions themselves have a strong track record of pro-consumer conduct, it is important that the highest level of compliance with these essential laws be maintained at all times. The creation of a dedicated Consumer Protection Office will make NCUA supervision of consumer protections even more efficient and effective, and will further underscore the priority of this function," Fryzel said.
NCUA has enforcement authority for a broad range of consumer regulations that apply to federally chartered CUs and, to a lesser degree, federally insured state charters. That includes the Truth In Savings Act, Truth In Lending Act, among others. This authority confers to examiners' responsibility for providing a satisfactory level of oversight for compliance activities. Chapter 18 and Chapter 19 of the Examiners Guide provides guidance to an examiner with regard to regulatory and consumer compliance.
In addition, one of the seven areas of risk evaluated during each examination is compliance risk: the current and prospective risk to earnings or capital arising from violations of, or nonconformance with, laws, rules, regulations, prescribed practices, internal policies and procedures, or ethical standards.
NCUA also has a consumer hotline to field member complaints, which the agency says is well-used.
NAFCU Supports NCUA Proposal
The NCUA proposal was supported by NAFCU which suggested that the new Consumer Financial Protection Agency exempt credit unions and banks by covering non-federally insured depositories. NAFCU told congressional leaders that rather than extending the proposed agency's authority to federally insured depository institutions, each functional regulator of federally insured depository institutions have their own Office of Consumer Protection established.
Fryzel said he plans to allocate money in next year's NCUA budget for the new consumer office. But Fryzel will be moved aside from the chairman's office in the next few months when the Senate is expected to confirm Deborah Matz as new NCUA chairman, leaving it up to Matz to follow up with the Fryzel proposal.
