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NCUA Chairman Todd M. Harper Statement on Agenda Items

September 2021
NCUA Chairman Todd M. Harper Statement on Agenda Items
Todd M. Harper

NCUA Chairman Todd M. Harper speaks during an event at the agency's headquarters in Alexandria, Virginia.

As Prepared for Delivery on September 23, 2021

Thank you, Board Member Hood and Vice Chairman Hauptman, for presenting this Board Action Memorandum to set specific dates by which the Credit Union Service Organization (CUSO) final rule, the Field of Membership Shared Facility Requirements final rule, and Mortgage Servicing Rights final rule will be added to the NCUA Board meeting agenda for October, November, and December, respectively.

Although I will not support this action — because I believe that crafting good rules should not be rushed — I want to be clear that, to me, this item is not a contentious one. There are times in many negotiations where the parties find themselves at an impasse. When that occurs, there are often processes that exist to move beyond the impasse while protecting everyone’s positions and rights. We have such rules built into the agency’s Board procedural regulations. That is how I view this agenda item on agenda items.

It should, however, come as no surprise to anyone that my policy positions on these three rules have not changed since they were first proposed.

In my view, the CUSO rule would be the wrong rule at the wrong time. The current economic environment we live in should have us focused on rules to protect consumers and to prepare the system for potential credit losses once COVID-19 pandemic-relief programs like supplemental unemployment benefits, foreclosure moratoriums, and mandatory forbearance periods end. The CUSO rule is not related to providing COVID relief to credit union members, and it is more likely in the long run to harm small credit unions than it is to help them.

What is more, in issuing a final CUSO rule, we would be abdicating our statutory duties to serve as stewards for the credit union system. This proposal would grow an already unregulated space within the credit union system with little accountability for protecting consumers and credit unions. If I have learned anything about financial services regulation during the last quarter of a century, it is that scandals and crises grow out of regulatory blind spots like the one this rule would create.

Further, the Financial Stability Oversight Council, the Government Accountability Office, and the NCUA’s Inspector General have all called for the agency to have vendor authority to oversee CUSOs and other third-party vendors. The top five CUSOs provide services to nearly 96 percent of total credit union system assets. A failure of even one of these vendors represents a significant potential risk to the Share Insurance Fund.

And, while I support expanding access to affordable financial services for people of modest means and diverse backgrounds, I could not support the Field of Membership Shared Facility Requirements proposed rule. In my view, the proposed rule and request for comment do not conform with either the letter or the spirit of the Federal Credit Union Act. However, I believe that if the Board can reach consensus on remedying those deficiencies, there could be a path forward on this rule.

Finally, in voting against the Mortgage Servicing Rights proposed rule in December, I stated that I was not necessarily signaling my opposition to moving ahead with a final rule. Instead, if the final rule contains appropriate and substantive guardrails to mitigate the inherent risks in mortgage servicing, I would support a final rule. Today, I am optimistic that the Board will find that consensus, as we do on many other items.

That concludes my comments. Vice Chairman Hauptman, do you have a motion?

Todd M. Harper Field of Membership
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