Capital Corner: A Guide to 2024, NCUA Edition

Provided by John McKechnie

At the beginning of each year, it’s tempting to do a “predictions” column, where you make a lot of educated (and uneducated) guesses about the next 12 months. And as a DC observer you do this hoping that the reader won’t hold you accountable for your hits and misses next January.

​So here is my look ahead at the coming year, pointing out things that seem likely based on what I’m seeing and hearing. This month, I’m focusing on what’s coming down the pike at NCUA and other regulatory agencies. Next month: Congress and the 2024 elections.

Here’s a grab bag of developments that credit unions can expect in 2024:
NCUA will be a different animal. Chairman Todd Harper (finally) will have what all other NCUA Chairs have had: a majority. Since he assumed the Chairmanship in 2021 Democrat Harper has led a Republican-majority Board, which presented some unique challenges. Now, joined by fellow Democrat Tonya Otsuka, Harper can push issues that he was forced to shelve without a second vote. For starters, expect rulemaking on 1) succession planning, 2) climate change and maybe 3.) overdraft programs.

What may NOT be the subject of new regulations? Credit union lending. Given the recent media coverage alleging lending discrimination at Navy FCU, you would think the NCUA Board would be active, but…NCUA has already ratcheted up oversight on Fair Lending practices through the exam process. NCUA has all the authority it needs. And Harper must feel very vindicated by events. Starting with his confirmation hearing in the Senate Banking Committee, Harper has promised more stringent mortgage lending oversight. Credit unions have grumbled at more frequent fair lending exams, but now industry pushback will appear tone deaf given the Navy controversy.

More explicit emphasis on mortgage lending oversight will be apparent when NCUA lays out its 2024 Supervisory Priorities, usually done in a February Letter to Credit Unions. NCUA annually tells credit unions what to expect in examinations, and in this case, it could entail a much more aggressive look at denial rates for minority applicants.

Look for NCUA, along with CFPB and banking regulators, to address suspected racial bias in residential appraisals. Regulators have proposed guidelines on challenging home appraisals, and now a more aggressive review process is likely to be put in place in 2024.

NCUA has beefed up its consumer protection staff — it’s a good bet that NCUA will dovetail its efforts with those of CFPB on a wide variety of lending and other product offerings.

There is increasing buzz among financial regulators to establish criminal penalties for violations of the Equal Credit Opportunity Act (ECOA). That will send an unmistakable signal to all credit unions to mind their lending Ps and Qs.

Finally, I would be remiss if I didn’t recognize the recent departures of three colossal figures in the credit union universe, Dan Berger (NAFCU), Rodney Hood (NCUA), and Bob Trunzo (TruStage). These leaders have stepped offstage and left indelible marks on the industry. The intellect, vision, guts, and overall sense of purpose shown by these gentlemen will be missed but never forgotten. Well done and thank you for your service.