Dear Majority Leader McConnell and Minority Leader Reid,
On behalf of the Credit Union National Association (CUNA), I am writing in opposition to the amendment offered by Senator Warren (#2607) which would grant the National Credit Union Administration (NCUA) additional authority to supervise third party vendors who help credit unions better serve their members. CUNA represents America’s credit unions and their more than 100 million members.
We oppose this amendment because we believe it is unnecessary and would increase the regulatory burden to which credit unions are subject. In addition, we believe the scope of the amendment exceeds the scope of the legislation to which it is being proposed and should be considered first by the Banking Committee under regular order.
Credit unions are already supervised for due diligence in third-party vendor relationships during their regular examinations, and many of the third parties on which credit unions rely also serve banks and, therefore, are subject to supervision by banking regulators. We question what will be gained from this additional authority when credit unions are already required to perform due diligence on their third party relationships and such due diligence is presently subject to supervision by NCUA. We further question the need to extend this authority to credit union service organizations which are generally owned by credit unions, when NCUA is presently able to supervise them through the credit unions that own them. For these reasons, providing NCUA with supervisory authority is redundant in terms of safety and soundness; unfortunately, the redundancy of this amendment will have real and significant consequences for America’s credit unions.
While the amendment will not enhance the safety and soundness of the credit union system, it will make it more expensive for credit unions to serve their members. The cost of doing business with providers that are already subject to supervision by other regulators will increase as they pass along the incremental cost of additional NCUA supervision on to the credit unions. Further, NCUA does not presently have the capacity or the competency to directly supervise these entities; conveying this authority will require NCUA to spend considerable credit union member resources to manage and implement this authority. We fear the cost of making the agency capable of such supervision would vastly outweigh the benefit derived from such supervision.
Finally, the scope of the Warren amendment extends far beyond the scope of the cybersecurity bill. It would not only permit additional supervisory authority over credit unions’ cyber security relationships but it would also permit additional supervision of any third party relationship the credit unions have. Because the scope of the amendment exceeds the scope of the bill, we encourage the Senate to reject the amendment so that the matter can be considered by the Banking Committee under regular order.
On behalf of America’s credit unions and their more than 100 million members, we urge the Senate to reject this amendment. Thank you for your consideration of our views.
Sincerely,
Jim Nussle President & CEO