Tabling of overdraft proposal a ‘missed opportunity’

May 21, 2020

The NCUA Board considered an interim final rule at its Thursday meeting that would have permanently amended one of the requirements that a federal credit union must adopt as a part of their written overdraft policy. However, the item was tabled as Board Members J. Mark McWatters and Todd Harper indicated their opposition.

Specifically, the rule would have removed the 45-day limit and replaced it with a requirement that the written policy must establish a specific time limit for a member either to deposit funds or obtain an approved loan from the credit union to cover each overdraft.

“We’re disappointed that the NCUA Board was unable to move forward with the interim final rule, which would have allowed credit unions to extend the period before which they would charge off overdrafted accounts, helping some consumers affected by COVID-19 stay connected to their credit union,” said Ryan Donovan, CUNA Chief Advocacy Officer. “Whether we’re in a time of crisis or not, credit union members benefit when regulations are written with flexibility. This represents a missed opportunity.”

Since the item was tabled after the motion to approve the interim final rule did not receive a second, Chairman Rodney Hood reserves the right to bring it before the board again.

“While it is rare for an open Board meeting to include an item that does not pass, it does occasionally happen,” Hood said in a statement. “If I only bring forth ideas to the Board that we know we have the votes for, it does not allow for an honest, open, and full debate. I brought this issue forth because I believe it is important. And the public has a right to transparency on this matter.

“This interim final rule should be approved because the problem is now. The other Board members disagreed,” Hood added. “However, the Office of the General Counsel determined that today’s rule was appropriate as an interim final rule and did not violate the Administrative Procedure Act. Therefore, I reserve my right as Chairman to have the Board reconsider this rule if the public thinks this is important.”

Earlier this week, President Donald Trump issued an executive order calling on agencies to seek ways to reduce regulatory burden.  Even though NCUA, as an independent agency, is not subject to the executive order, Hood has said NCUA would act in its spirit.

 “We appreciate Chairman Hood’s effort to reduce regulatory burden and protect credit union members, and hope the NCUA Board will reconsider today’s action very soon.”