Citing its reputation for responsible banking practices and customer satisfaction with its overdraft programs, an executive with the National Association of Federal Credit Unions wrote Consumer Financial Protection Bureau Director Richard Cordray to urge caution when considering how overdraft rulemaking could affect credit unions.
NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt wrote in a letter to Cordray that overregulation “has already had a substantially negative impact on credit unions and their over 100 million members,” and credit unions have “a vested interest” in educating their members on overdraft terms and conditions.
“Therefore, NAFCU believes it is critical for the bureau to avoid any rulemaking that unjustifiably restricts the ability of credit unions to continue to provide their members with the types of overdraft programs they overwhelmingly desire,” Hunt wrote.
She cited NAFCU’s Economic & CU Monitor survey from November/December, showing that most credit unions offered multiple overdraft programs. Of those credit unions with an overdraft or courtesy pay program, 93.5 percent offer an alternative product such as an overdraft line of credit (83.9 percent), a linked savings or money market accounts (61.3 percent) and short-term, small amount loans (22.6 percent). And member response to the programs has been “exceedingly positive,” she wrote. Only 3 percent of members provided negative feedback to overdraft programs in the last survey.
“The loss of a service that they have come to rely on would result in widespread dissatisfaction among members with the credit union, and the members themselves could suffer embarrassment and a decline in their credit rating when transactions are declined,” Hunt wrote.
“Credit unions are unique, and their track record as good actors within the financial services industry provides they should not be grouped together with entities that the bureau seeks to restrict,” she added. “Any additional unwarranted regulatory constraint is likely to encumber overdraft products and, ultimately, hurt the consumers that opt into these services for peace of mind.”