As Prepared For Delivery on May 21, 2020
Thank you for your presentation.
Consistent with my regulatory philosophy, this change provides appropriate regulatory relief and updates an outdated regulation to reflect contemporary market realities while aligning us with generally accepted accounting principles. I believe that this rule is reasonable is prudent and is needed during the pandemic.
The “not to exceed 45-day” standard is overly prescriptive. It is my understanding that the inclusion of the “not to exceed 45-day” language, which was adopted by the NCUA in 2000, is inconsistent with the guidance that the federal banking agencies provided in 2005 to their banks and savings associations. The language in the NCUA’s rule did not necessarily address collectability. Rather, it was a maximum timeline to provide a prescriptive measure for credit unions.
I also acknowledge that while many credit unions would adopt and use the flexibility provided by eliminating the strict “not to exceed 45-day” language, some may currently have their own policies that provide a period less than 45 days for an overdraft to be cured and that they may continue to do so under this rule. Credit unions are in the best position to determine how to best serve their members and this rule change only provides them with additional flexibility to do so, but does not require them to change current practices if they have elected to be more conservative.
Today more folks are having to do overdraft, it’s a reality in today’s economic environment. Comments will still be considered and changes will be made if necessary.
Today’s rule should be an interim final rule because the problem is now. If we go through a comment period, we are going to have people who are now unemployed who will have to have overdrafts charged off. They do not need credit unions calling them on day 43 or 44 before the charge off. Everyone knows they have it. They know how it works. Members understand the fee. And quite frankly, 60 days may not be enough. But it’s a start. People who are losing jobs do not have time to wait for a proposed rule, and comment before taking effect.
If members are not able to use the overdraft program of their credit union and they needed groceries on Thursday night but not being paid until Monday, the family still has to eat. If the credit union doesn't cover it, they'll go to a pernicious payday lender. Members opt in to overdraft. And anecdotally, from my calls with credit unions, I know that generally when credit unions are asked by members to help on overdraft fees during this time, they are responsive.