CUNA, Credit Union League Tell Sen. Ossoff Vendor Bill Is Not Needed
Both CUNA and a credit union league have expressed their opposition to a bill that would grant the NCUA third-party vendor oversight powers. Learn why.
Credit union trade group and league both against granting the NCUA third-party oversight powers.
The NCUA does not need added third-party vendor authority, CUNA President/CEO Jim Nussle, told Sen. Jon Ossoff, D-Ga., Thursday.
In a letter opposing Ossoff’s recently introduced legislation, S. 4698, Nussle said the NCUA has exercised effective regulation of Credit Union Service Organizations (CUSOs) and third-party vendors without the added authority. Nussle termed the legislation “a solution in search of a problem.”
Ossoff is the main sponsor of legislation that would provide the agency with supervisory powers over third-party vendors. The House already has passed legislation to do that as part of its FY23 defense authorization legislation.
NCUA officials, as well as the agency’s inspector general and the Financial Stability Oversight Council, have called for enactment of such legislation.
What Did the Letter Say?
In his letter, Nussle told Ossoff that the NCUA has virtually limitless authority to request owners of a CUSO to provide information and that the agency has broad authority to adjust due diligence expectations that credit unions must satisfy when hiring third-party vendors.
He said that CUNA also is concerned about the budgetary implications of providing the NCUA with vendor oversight powers, adding that the agency would have to hire personnel with the appropriate expertise.
“If Congress conveys this authority to NCUA, the agency should commit to funding this authority by reducing expenditures elsewhere,” he wrote.
Nussle noted that while the agency has sought this authority for several years, the agency has not developed a clear vision of how it would use the new powers.
“Sharing details of their intentions with Congress and the industry is necessary to us understanding what to expect if NCUA is granted this authority, and it could help allay some of our concerns,” he stated.
Nussle said further that CUNA is open to discussions about changes to the Bank Service Company Act that could augment the NCUA’s current supervisory powers.
While Nussle did not outline what specific changes might be necessary, Brad Thaler, NAFCU’s vice president for legislative affairs said in May that banking regulators who are members of the Federal Financial Institutions Examination Council reportedly may be unwilling to share their reports of vendors with the NCUA because the credit union regulator lacks proper authority.
He said that, if necessary, Congress should compel the other regulators to share their reports with the NCUA.
Credit Union League Also in Opposition
At the same time Nussle sent his letter, the trade group released a statement from Samantha Beeler, president of the League of Southeastern Credit Unions, echoing opposition to Ossoff’s bill. The league represents credit unions in Ossoff’s home state of Georgia.
“While we share and appreciate Senator Jon Ossoff’s interest in strengthening cybersecurity, we know the broad scope of this legislation is not the solution,” she said.
Beeler added, “As the role of the NCUA is to regulate federally chartered credit unions, we affirm the agency should focus on examining credit unions and simply ensure that credit unions are up to date with cybersecurity standards and following new guidance as it is proposed.”