December 07, 2015

Thaler urges against NCUA 3rd-party vendor authority

NAFCU Vice President of Legislative Affairs Brad Thaler urged members of the House Financial Services Committee to oppose granting NCUA third-party vendor authority, in advance of hearing on the Financial Stability Oversight Council today.

Thaler wrote committee members in preparation for testimony from NCUA Chairman Debbie Matz and other members of the FSOC, in a hearing focused on the council's agenda, operations and structure.

"Such authority would impose significant costs on credit unions, while providing little benefit and no clear relief to the industry," Thaler wrote. "While NAFCU acknowledges the importance of cybersecurity and risk management, we firmly believe that cybersecurity and third-party vendor examination authority do not go hand in hand. We view this request as regulatory overreach that would prove costly and create new burdens for the industry."

During an FSOC meeting in November, Matz reiterated NCUA's wish for third-party examination authority and thanked the council for including that recommendation in a report to Congress last spring. NAFCU continues to oppose such authority for NCUA, noting it would impose significant costs on credit unions without providing significant benefit or relief.

Thaler also emphasized the need for CFPB and other financial regulators to level the playing field by regulating non-traditional lenders, such as online lenders. He also raised concerns about CFPB and other regulators publicizing unverified complaints, which he noted could lead to reputational damage, and the need for regulators to coordinate in order to reduce the regulatory burden for financial institutions.

The FSOC, created by the Dodd-Frank Act, has 10 voting members, nine of whom represent federal financial industry and securities market regulators. It also has five members who serve in an advisory capacity. It is headed by Treasury Secretary Jack Lew.