NCUA Consumer Protection Must Catch Up to Other Regulators: Harper

The NCUA should catch up to other financial regulators and bolster its consumer protection efforts at credit unions– some of which may not have a full understanding of their responsibilities, agency board member Todd Harper told CU Times.

“Just as we have safety and soundness responsibilities, we have consumer financial protection responsibilities,” he said at a one-on-one interview at NCUA’s headquarters, during which he outlined his priorities for the board.

He said the NCUA’s consumer protection efforts differ from those at other financial regulators. Those regulators, he said, have separate consumer protection examinations.

“We look at a couple of things each year,” he said.

Harper has called for a dedicated staff for consumer protection compliance and wants the board to consider the issue when it votes on the 2020 agency budget.

Harper said that the taxi driver debacle in New York City demonstrated the need for improved consumer protection for sole-proprietor businesses.

Harper joined the board earlier this year, having been confirmed as the sole Democrat on the panel. Since then, he has found himself as the lone vote on a couple of high-profile issues. He voted against the plan to further delay the agency’s Risk-Based Capital rule and to increase the appraisal threshold for certain transactions.

Harper said that cybersecurity is “the thing that worries me the most.” He added, “I don’t want the credit union system to be the gateway for a virus or some issue coming in.”

He said he is particularly concerned since the NCUA does not have authority over third-party vendors. He said all three members of the board want Congress to give the agency that power.

Harper also said he is closely watching the issue of capital liquidity and capital at credit unions.

“You can go under if you don’t have enough capital,” he said. “You can go under if you don’t have enough capital liquidity.

A key metric, he said, is a credit union’s loan-to-share ratio. During the financial crisis, that bottomed out at about 66%. At the end of last year, it stood at 85%, he said, adding that as credit unions come closer to 100%, the NCUA may need to better address the issue.

Harper said he is concerned about rising consumer debt, which has reached $4 trillion, as well as the soaring federal debt, adding that the federal debt could crowd out other priorities.

“When we hit that bump in the economy, and we will hit that bump in the economy…with so much consumer debt out there, some people will get in trouble,” he said.

Harper said it is the job of credit unions, not the NCUA, to address the increasing number of bank attacks on the credit union system.

He said that any response to those attacks should focus on anecdotes. “The most effective way to talk about issues is through stories,” he said, adding that so far, he has visited 11 states since being confirmed as a member of the board.

During those visits he has placed on emphasis on meeting with officials from individual credit unions and state regulators.

“My job is to protect safety and soundness,” he said. “It’s not to listen to the arguments banks are making. And I am protecting safety and soundness.”