Harper: Exams Demonstrate Need for Consumer Protection Focus

Citing deficiencies that National Credit Union Administration examiners found during the past year, board Chairman Todd Harper renewed his call Thursday for the agency to develop a separate consumer protection examination.

“We should be going in and looking at [credit union] consumer protection compliance systems,” Harper said, during his confirmation hearing before the Senate Banking Committee.

President Biden has nominated Harper for a full term as NCUA chairman.

Harper said that during the past year, NCUA examiners found problems with credit union compliance with three laws—The Electronic Fund Transfer Act, The Fair Credit Reporting Act and the Truth in Lending Act. He said that the NCUA is the only federal financial regulator that does not provide credit unions with a separate consumer protection score during their examinations.

Banking committee member Sen. Elizabeth Warren, D-Mass., said she too is concerned that NCUA examinations are not sufficiently focused on consumer protection.

During the hearing, Harper clashed with Senate Banking Committee ranking Republican Sen. Pat Toomey of Pennsylvania over whether financial regulators should focus on climate change as a systemic risk. “Financial regulators are not environmental regulators,” Toomey said. He said that credit unions do not fail due to climate change, but instead, fail because of “more mundane management issues.”

Harper said that an increasing number of storms and other implications of climate change are affecting credit unions in different ways. He said some credit unions that have fields of membership centered on specific industries may have to diversify their membership. He added that credit unions in agricultural areas may have problems if crops no longer can be grown.

Responding to a question, Harper said he can see advantages and disadvantages to increasing the number of NCUA board members. On the one hand, he said, it would provide “more voices at the table.” He added that federal open meetings make it difficult for two members to communicate, since such a conversation would constitute a quorum of the board. He said that on the other hand, an increase in the number of board members would increase agency costs.

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