NCUA chairman pushes Congress on cybersecurity, MBL reforms

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Appearing before Congress for the first time as chairman of the National Credit Union Administration, Rodney Hood on Wednesday called on lawmakers to expand the regulator’s powers during testimony before the Senate Banking Committee.

Hood spoke only briefly during the two-hour hearing, the bulk of which was taken up by questions directed toward Comptroller of the Currency Joseph Otting, Federal Reserve Governor Randal Quarles and FDIC Chairman Jelena McWilliams. But written testimony from the newly installed chairman offered potential insights into some of the agency’s priorities under Hood, along with newly confirmed Board Member Todd Harper and Mark McWatters, who served as chairman until Hood was confirmed.

Hood highlighted three areas for prime congressional action:

  • Modifying the Federal Credit Union Act’s field of membership provisions to allow all federally chartered credit unions to add underserved areas to their FOM
  • Granting the NCUA board the authority to override maximum loan maturities of 15 years
  • Providing “additional flexibility” under the member business lending cap to help boost commercial lending at CUs – particularly in the wake of a recent partnership between NCUA and the U.S. Small Business Administration – though Hood stopped short of explicitly calling on Congress to raise the cap or eliminate it entirely.

Hood’s written testimony also reiterated the agency’s long-standing request that Congress grant NCUA third-party vendor oversight to better protect credit unions against cybersecurity threats.

“The credit union system is particularly at risk because the NCUA does not have sufficient legal authority to directly identify and address systemic cybersecurity risk and the potential contagion risk that key fintech service providers can pose,” Hood wrote.

Hood added that the lack of vendor authority contrasts that of other regulators, including the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System. Former chairman McWatters testified on that topic last fall to little effect, and the regulator may be even less likely to get its wish following a recent internal audit that found NCUA failed to adequately manage its own IT equipment.

Much of Wednesday’s hearing focused on predatory lending practices at banks and expanding financial services access for consumers in rural regions – a project Hood has previously said is close to his heart.

While he didn’t face much questioning on those issues, Hood’s written testimony claimed CUs can be a “viable alternative to predatory lenders.”

“My priority is to strengthen the vitality of the credit union industry by doing even more to bolster underserved communities, including those in rural areas, persons with disabilities and low-to-moderate income households,” Hood said during his testimony.

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Law and regulation Field of membership Cyber security MBL Lending NCUA Senate Banking Committee