ALEXANDRIA, Va. (Oct. 2, 2018) – Congress could bolster consumer access and better protect credit unions and members by making legislative changes proposed today by NCUA Board Chairman J. Mark McWatters.
McWatters testified before the Senate Committee on Banking, Housing, and Urban Affairs. His oral (opens new window) and written (opens new window) statements are available on the NCUA’s website.
“While the NCUA Board can provide federally insured credit unions with meaningful regulatory relief, Congressional action is required to provide additional flexibility in some areas,” McWatters said. “Congressional action can provide new avenues for growth without sacrificing the safety and soundness of the credit union system.”
Chairman McWatters encouraged lawmakers to make changes to the Federal Credit Union Act to open up access for more underserved households to credit union membership.
For example, the Federal Credit Union Act permits only federal credit unions with multiple common bond charters to add underserved areas to their fields of membership. Allowing all federal credit unions to add underserved areas would give more people access to federally insured financial institutions and would make more credit unions eligible for Community Development Financial Institutions Fund programs.
McWatters’ other recommendations included allowing chartering of web-based communities and permitting credit unions to add people living in a census tract where current projections would indicate they qualify as low-income.
The NCUA is the only federal financial institutions regulator that does not have authority to examine and supervise third-party vendors, and Congress should correct that, McWatters said.
Noting the rapid growth of technology in the financial sector and growing cybersecurity risks, McWatters said credit unions are increasingly using credit union service organizations and other third-party vendors to provide technology services.
Noting a 2015 Government Accountability Office report supporting the NCUA receiving third-party vendor authority, McWatters said, “To manage the systemic risk fintech poses to the credit union system, the NCUA needs vendor authority comparable to our Federal Financial Institutions Examination Council counterparts.”
McWatters described the NCUA’s progress in reducing regulatory burdens on credit unions and making the agency more efficient, effective, transparent, and accountable while continuing to protect more than 114 million credit union members and the safety and soundness of the National Credit Union Share Insurance Fund.
Notable among these accomplishments, the NCUA:
McWatters said the NCUA implemented parts of the Economic Growth, Regulatory Relief, and Consumer Protection Act having a substantial impact on credit unions. The agency:
McWatters stressed the NCUA Board’s bipartisan process that produced these accomplishments.
“I wish to thank my Democratic colleague, Rick Metsger, for diligently working with me in a collegial and collaborative manner for over 28 months to accomplish our shared administrative and regulatory agenda,” he said.
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