| HENRY C. MEIER, ESQ.
Get Ready for Increased NCUA Consumer Compliance Focus
Credit unions should prepare for increased scrutiny of their compliance with consumer protection laws now that ...
NCUA held its monthly board meeting this week. Credit unions should prepare for increased scrutiny of their compliance with consumer protection laws now that Chairman Harper has a Democratic ally. The Board voted unanimously to approve its 2024 Performance Plan, which aims to increase fair lending examinations to at least 60 this year. What’s more important is new board member Tanya Otsuka’s indication that she strongly supports this increased focus. She explained that “fair lending exams help ensure credit unions are fairly and equitably reaching all their members. Unfortunately, we’ve seen that redlining and lending discrimination continue to be a problem today. This will be an area of focus for me. I support a strong consumer compliance program and I’d like to work with the Board to continue to strengthen our fair lending and consumer protection efforts.”
It’s safe to assume that NCUA’s greater emphasis on scrutinizing credit unions’ consumer compliance will indirectly impact all credit unions. Hopefully, this new emphasis does not overburden small credit unions, many of which struggle to afford the cost of complying with these regulatory mandates. In addition, it’s still a head-scratcher to me why the NCUA feels this is such an important priority when the largest credit unions are already subject to the direct supervision of the CFPB, and NCUA has produced no evidence that credit unions are systematically failing to comply with consumer protection laws.
Other goals in the performance plan include approving at least fifteen additional “underserved area” designations and increased coordination with CDFI credit unions.
NCUA Receives Briefing On its DEIA 2024-2026 Strategic Plan
Section 342 of the Dodd Frank Act requires agencies to annually report on their efforts to increase diversity within their workforce, the entities they regulate, and an agency’s vendor pool. The Board received a briefing on its Diversity, Equity, Inclusion and Accessibility Strategic Plan for 2024-2026. In discussing the plan, Chairman Harper underscored the importance of credit unions participating in the voluntary Diversity Self-Assessment Survey. CEOs received notice of the survey in October and can respond until February 15th. Last year, approximately 10% of credit unions responded to the survey.
Lurking in the background of any discussion of diversity initiatives is the question of how great an impact the Supreme Court’s decision in Fair Admissions v. Harvard will have on precisely these types of programs. Depending on which party wins the election, it seems inevitable that initiatives, such as NCUA’s, which emphasize encouraging greater diversity, will be questioned.
NCUA Releases Quarterly Economic Snapshot
The NCUA released its quarterly economic snapshot this week. Things have pretty much continued the way they have for the last couple of years. On a macro level, the industry is continuing its generally solid performance, but there are indications that more members are struggling to make payments. Among NCUA’s highlights:
- The delinquency rate at federally insured credit unions was 72 basis points in the third quarter of 2023, up 19 basis points from one year earlier. The net charge-off ratio was 56 basis points, up 25 basis points compared with the third quarter of 2022.
- Insured shares and deposits rose $23 billion, or 1.4 percent, over the year ending in the third quarter of 2023, to $1.72 trillion.
- The loan-to-share ratio stood at 84.8 percent in the third quarter of 2023, up from 78.4 percent in the third quarter of 2022.
Get Ready for Increased NCUA Consumer Compliance Focus -