Newsroom

February 26, 2015

McWatters questions vendor authority, reg relief

NCUA Board Member Mark McWatters, quoted in Credit Union Times, strongly criticized the agency for "asking for more regulation," referring to NCUA's push for third-party vendor oversight in testimony for a Senate Banking Committee earlier this month.

McWatters said such authority would cause an NCUA budget increase and called the episode "embarrassing."

At the hearing, NCUA Director of Examination and Insurance Director Larry Fazio said obtaining examination and enforcement over third-party vendors – credit union service organizations and others – is NCUA's "top legislative priority."

NAFCU continues to oppose giving NCUA direct authority over third-party vendors; it believes such authority is unnecessary since NCUA already requires credit unions to ensure the vendors with which they maintain working relationships provide reports directly to the agency.

"What little political capital credit unions have on Capitol Hill was squandered by going to a regulatory relief hearing and asking for more regulation," McWatters told CU Times. "Now, I know NCUA tried to say, ‘well, if you give us vendor authority, it will really decrease the regulations on individual credit unions.' But, I don't know anyone who really believes that."

McWatters said NCUA should have focused on expanding secondary capital authority, increasing the member business lending cap and field of membership issues.

Matz said NCUA is pushing for third-party exam authority because of cyber threats and noted financial trade organizations' advocacy for cybersecurity protections. But McWatters questioned this reasoning. "We're not just talking about cybersecurity. We're talking about, presumably, all vendors … I can't image it won't be a substantial increase to the NCUA budget," he said.

NAFCU Director of Regulatory Affairs Alicia Nealon also questioned the necessity of giving NCUA vendor authority in a letter to the editor in CU Times this week.