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NCUA's recent loss of a thumb drive containing sensitive data from an insured credit union "resulted from a failure to follow agency policies on securing sensitive data," agency Executive Director Mark Treichel said in a statement Wednesday.

The breach, which drew a strong response from NAFCU, occurred when an NCUA examiner lost a thumb drive provided by Palm Springs Federal Credit Union that reportedly contained members' names, addresses, Social Security numbers and account numbers. The thumb drive was lost in October.

NAFCU President and CEO Dan Berger, writing Tuesday, urged NCUA Chairman Debbie Matz to ensure a careful investigation of the breach, and he encouraged full transparency in that effort. Berger welcomed NCUA's follow-through and said NAFCU "looks forward to seeing improvements in the way NCUA handles and protects the sensitive data it receives from insured credit unions during reporting and examination processes."

Berger reiterated, "As a federal regulator and a steward of credit unions' sensitive information, NCUA must be held to the highest standard for safeguarding such data."

"NCUA is using this incident as an opportunity to learn," Treichel said in Wednesday's statement. "We are reinforcing training on protecting sensitive information, we are reviewing our policies and procedures in this area, and we are moving as quickly as possible to consider and adopt additional safeguards to protect electronic data, including:

• Creating a team to review the circumstances surrounding this incident.
• Directing the already-established review team responsible for NCUA's Guidelines for Safeguarding Member Information (Part 748 of regulations) to study whether to require federally insured credit unions to encrypt electronic member information.
• Evaluating development of a system for sharing information between the agency and federally insured credit unions through a secure portal, rather than using hardware like a thumb drive.