ALEXANDRIA, Va.– Two members of the NCUA Board have issued statements critical of an announcement the agency is curtailing its collection of total OD/NSF fee income data from credit unions of more than $1 billion in assets, and are calling for its reinstatement, with one board member suggesting the change could come back to “bite” credit unions.

Both board members Todd M. Harper and Tanya F. Otsuka issued their statements in the wake of an announcement by Chairman Kyle Hauptman that NCUA will not be making the information available. it has made it difficult to collect such data via Freedom of Information Act requests.

Harper and Otsuka are the two Democrats on the three-member panel. Hauptman, a Republican, was elevated to the chairmanship—replacing Harper—by President Trump.

The policy change, announced by Hauptman during America’s Credit Unions GAC last week, as the CU Daily reported here, is effective with call reports for the first quarter of this year.

Board Did Not Vote

The change in policy was not voted on by the NCUA board, with Harper saying the change in policy is the result of a “unilateral” decision by Hauptman.  The White House has also announced it is exerting greater control over independent regulatory agencies and a rollback in regs is part of its agenda.

As the CU Daily reported, there has been considerable scrutiny of credit union OD/NSF income and its collection since NCUA announced it would begin doing so last year for credit unions of more than $1 billion in assets.

In January of this year, under Harper,  the agency released a Research Note that provided an analysis of statistics for overdraft and non-sufficient funds fees, and observations on the relationship between overdraft and non-sufficient funds fees and other revenues.

The Prior Policy

Under the previous data collection policy now rescinded, the NCUA required federally insured credit unions with more than $1 billion in assets to disclose, separately, income from overdraft and non-sufficient funds fees. The data was available to the public on an individual basis and in the aggregate. 

Under the new policy, which goes into effect with the March 31, 2025, Call Report cycle, NCUA said it will collect overdraft and NSF fee data as part of the examination process and will continue to publish overdraft and NSF fee income data in the aggregate once updates to its examination system are complete.

“Our regulatory framework should protect consumers from predatory practices without depriving them of the financial tools they need to navigate their lives,” Hauptman said in a statement . “The appropriateness of overdrafts and NSF fees charged is a matter between a credit union and its member-owners who ultimately determine how their credit who ultimately determine how their credit union is run.”

‘Bedrock Principle’

But Harper and Otsuka said its members who are now lacking insights into how their CUs are managed.

“For markets to work efficiently, transparency is needed. That’s a bedrock principle of economics,” said Harper in a statement. “And, it’s one of the many reasons why credit union member-owners and the public should have clear visibility into the income a credit union generates from overdraft and NSF fees charged to its member-owners.

“To advance credit union efforts to benchmark fees against other financial institutions, improve marketplace competition, and increase consumer understanding of the fees they’re charged within the credit union system, the NCUA required federally insured credit unions with more than $1 billion in assets to disclose, separately, income from overdraft and NSF fees beginning with the 2024 first quarter Call Report,” Harper continued. “With today’s release of the 2024 fourth quarter Call Report results, however, that desirable transparency experiment will regrettably end.”

The CU Daily has coverage of the fourth quarter here.

Nearly $4 Billion in Fees

Harper said NCUA found that over the last year if found reporting institutions had collected $3.8-billion in such fees, although some FCUs did not charge any fees at all.

“For most reporting credit unions, overdraft and NSF fees accounted for between 2% and 5% of revenue. Some outliers charged fees amounting to as much as 18% of income,” Harper said. “For those billion-dollar-plus credit unions with higher overdraft and NSF fees, we also found that they did not use those fees to subsidize better interest rates or lower other fees.”

What Bank Data Show

In his statement, Harper noted federally insured banks with more than $1 billion in assets began reporting these numbers in 2015, and stated that since that time “consumers have benefitted as banks have lowered their reliance on such fees.

“In fact, the Consumer Financial Protection Bureau found that roughly two out of three banks with $10 billion or more in assets have eliminated NSF fees, saving consumers $2 billion annually,” Harper’s statement continued. “Yet, among credit unions with greater than $10 billion in assets, four out of five continue to charge NSF fees. That overreliance on such fees is one of the many reasons why the NCUA began collecting and publicly reporting this data on Call Reports.”

‘Unilateral Action’

“But, by unilateral action by the Chairman, credit union member-owners and the public will now no longer have access to this important information,” Harper continued. “If credit unions are to live up to their statutory purpose of supporting the financial needs of ‘people of modest means’ and the credit union movement’s oft-touted ‘people-helping-people’ philosophy, then credit union member-owners should have access to this basic market information, so they can make better decisions about how and where to deposit and access their hard-earned money.”

Harper noted that while NCUA will no longer publish overdraft and NSF fee income for individual credit unions on a real-time quarterly basis, it will collect the data during supervisory examinations, an approach Harper said “will likely shield” credit union members from accessing the information through the Freedom of Information Act. 

“Ultimately, this non-disclosure will result in financial exclusion, especially when one considers that NSF is a fee for not paying for an item,” Harper said.

Swept ‘Under the Rug?’

Harper called for NCUA to restore “transparency” for overdraft and NSF fees on Call Reports. 

“If the Chairman is unwilling to reverse course, then the overdraft and NSF fee data collected in the exam process at individual credit unions shouldn’t be shielded from public release through the Freedom of Information Act,” Harper continued in his statement. “If such data was once already public information, why now sweep it under the rug?”

Harper also cited a statement made by Hauptman that the appropriateness of overdrafts and NSF fees charged is a matter between a credit union and its member-owners and said, “If those member-owners ultimately determine how their credit union is run, then credit union management should make their overdraft and NSF income upon member-owner request.”

‘Member-Owners Deserve Better’

Calling himself a “steward” of the credit union system who strongly believes in the power of CUs to “lift up everyone,” Harper called the change in policy at NCUA an “unnecessary decision” that moves the credit union movement closer to an industry, one that’s worse than banks when it comes to fee disclosures. Profiting from consumers’ problems will come back and bite you. America’s credit union member-owners deserve better.”

Otsuka: ‘Unfortunate’ Change

In her statement, Otsuka called “member empowerment a cornerstone” of credit unions and said transparency is “a simple way to demonstrate the credit union difference, enable consumers to make informed financial decisions, and help maintain trust and confidence in our cooperative system of credit.”

It was in that spirit, Otsuka said in her statement, that NCUA began collecting and publishing the quarterly call report data on OD/NSF fees. 

‘Step in Wrong Direction’

The change in policy, said Otsuka, is a “step in the wrong direction.”

“There is no data to suggest credit unions limited the services they provide low-income or underserved consumers last year simply to avoid having to report fee income on the NCUA’s Call Report,” Otsuka stated. “Credit unions with higher overdraft and NSF fees also do not appear to offer lower fees to members for other services, nor better interest rates. Overdraft and NSF fees put a strain on members who are likely already struggling and may further trap them in a cycle of financial hardship that can be difficult to escape.”

For that reason, Otsuska said, providing the public information about fees through the call reports enabled consumers to more readily compare credit unions and other financial institutions. 

‘Can’t be Used as Excuse’

“Credit unions are already required to disclose to their members the fees that they charge. Instead of providing overdraft and fee income in a transparent, consistent, and standardized way, collecting overdraft and NSF fee data through the exam process will erode the quality of the data and hamstring our ability to monitor trends,” Otsuka said. “The decision to collect this data through the supervisory process rather than through the quarterly call report must not be used as an excuse to withhold it from credit union members or the broader public.

“Transparency is vital for promoting fair competition within the financial system. Limiting access to individual credit union data does not help consumers, encourage the chartering of de novo institutions, or reduce regulatory burden on small cooperatives, which were exempt from the requirement to report these data,” Otsuka continued. “It just enables larger institutions that rely heavily on fee income to operate in the shadows, resulting in less competition and less choice for consumers, and places institutions that stay true to the principles of the credit union movement at a disadvantage. 

“At the end of the day, members, as owners of their credit union, have a right to know how their institution operates, just like any investor would if they purchased stock in a publicly traded company. We shouldn’t keep credit union members in the dark.”

Chair Urged to Act

Otsuka said she is urging Hauptman to “prioritize transparency” and to continue the practice of quarterly reporting and public disclosure of overdraft and NSF fee income for individual credit unions. I

Don’t Make Us Call You Early in the Morning: Sign Up for The CU Daily’s

Free Morning Headlines E-Newsletter Here.