WILMINGTON, N.C.-Despite a new focus by the Consumer Financial Protection Bureau on overdraft policies, one analyst says the majority of credit unions should not worry about their OD revenue streams, at least for 2012.
Christopher Leonard, president of Velocity Solutions, said his company has received numerous calls from its credit union clients asking what the CFPB's announcement might mean to their overdraft income. "The CFPB does not have enforcement power over financial institutions below $10 billion in assets. So a large number of CUs are exempt from enforcement actions the government agency could take on overdrafts.
However, the impact all credit union overdraft programs could feel from the CFPB could come from new overdraft rules the bureau develops (see related story), said Leonard, who emphasized that new rules take a great deal of time to create and pass. "From insiders we talk to in the CFPB world, the thinking now is because we are in an election year the bureau, and President Obama, believe they will get the most bang for the buck by bringing enforcement actions against big banks instead of writing a bunch of new overdraft rules.
Leonard contended that the CFPB, too, is most concerned now with mortgages and payday lending, which will take its eye a bit off overdrafts. But when the bureau does begin examining overdraft practices, Leonard reminded the areas of focus will be the practice of posting transactions from the highest to the lowest, missing or confusing overdraft information, misleading marketing, and the disproportionate impact overdrafts are having on youth and low-income individuals.
For info: www.myvelocity.com
