When autocomplete results are available use up and down arrows to review and enter to select.
ICBA said a new regulatory action against VyStar Credit Union for harming consumers through its botched rollout of a new online banking system exemplifies the risks posed by lagging credit union regulation.
VyStar Penalty: The Consumer Financial Protection Bureau said VyStar transitioned to a new, dysfunctional online banking platform in May 2022 that made it difficult for credit union members to perform basic banking functions for weeks or months. It ordered VyStar to make affected consumers whole and pay a $1.5 million civil penalty to the bureau’s victims relief fund.
Lack of Oversight: In a national news release, ICBA said the incident exemplifies the risks posed by the National Credit Union Administration’s inability to examine credit union third-party service providers. “Policymakers must provide the NCUA with the same authority that bank regulators use to supervise for cyber risk,” ICBA President and CEO Rebeca Romero Rainey said.
Consumer Impact: ICBA noted that NCUA Chairman Todd Harper has called the agency’s lack of authority a ‘regulatory blind spot’ and said that approximately 90% of the tax-exempt credit union industry’s assets are managed by third-party service providers with no NCUA oversight. “This lack of regulatory oversight is particularly concerning given the surge in tax-exempt credit unions acquiring tax-paying community banks,” Romero Rainey said.
Recent Credit Union Developments: ICBA recently called on the NCUA to curb the abuse of its subordinated debt rule, released polling showing U.S. adults increasingly support equal consumer protections for credit union customers, and lauded the FDIC’s ICBA-advocated inclusion of credit unions in its merger guidance.
Grassroots Resources: Community bankers can use ICBA’s Be Heard grassroots action center to call on members of Congress to hold a hearing on credit union policy. Additional resources are available on the ICBA website.