NCUA Board Member Tanya F. Otsuka Statement on NCUA’s Collection of Overdraft and Non-Sufficient Fund Data

As Prepared for Delivery on May 22, 2024

The NCUA has a responsibility to ensure we have a safe and sound system of cooperative credit and a mandate to ensure that credit unions are following all applicable laws. The actions that NCUA has taken over the years with respect to overdraft and fee income is consistent with those responsibilities.

It’s important for the NCUA to understand the data both at the individual institution level and system wide. We also need to make sure that it is transparent for credit unions, credit union members and the public. Overdraft practices and fees should already be disclosed to members and in compliance with applicable laws.

An overreliance on overdraft and NSF fees adversely affects both members and their credit unions. Institutions that rely more on fee income have greater concentration risk.

NCUA’s supervisory priorities have included overdrafts for several years. In 2018 and 2019, NCUA examiners reviewed credit union overdraft practices, including opt-in disclosures, and conducted transaction testing to verify that credit unions were complying with the applicable regulatory provisions.

In 2022, examiners requested information about a credit union’s policies and procedures governing its overdraft programs.

In 2023, NCUA examiners started conducting reviews of overdraft website advertising, balance calculation methods, and settlement processes for federal credit unions with assets totaling $500 million or more.

I think it is prudent to not prejudge the data or assume a narrative before assessing the data in aggregate. Our very capable staff is currently assessing the newly collected data and I look forward to reviewing it to get a better sense of the bigger picture.