ICYMI: America’s Credit Unions Board Member testifies on CFPB reforms

In case you missed it…Commonwealth Credit Union President/CEO and America’s Credit Unions Transition Board Secretary Karen Harbin testified on reforming the CFPB before the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, chaired by Rep. Andy Barr, R-Ky.

Harbin’s testimony ahead of President Joe Biden’s 2024 State of the Union Address is critical to demonstrate the importance of having clear, fair rulemaking processes and government agencies that are transparent in their efforts and accountable to the public.

Congressman Barry Loudermilk focused his time on credit unions and how they use the overdraft protection program to educate members and provide a hand up from paycheck to paycheck.

Loudermilk: Ms. Harbin, if a member of your credit union repeatedly used your overdraft product and paid the fee multiple times in the same year, do you think the member A, doesn’t understand the product or its associated fee or B, is choosing to use the product as intended?

Harbin: Thank you for that question. I believe they are intending to use the product as intended. We track whether it’s a first-time user, whether it’s an excessive user. We have so many controls in place that help our member understand the program. When they open the account, it’s thoroughly explained what our overdraft program consists of. They then receive a letter that reiterates how the program works. The first time they use the program, they get another letter to educate them. They get an excessive use letter and then we spend lots of time counseling members on the phone explaining that if they want, if they need money to get them from paycheck to paycheck, why not take out one withdrawal, in cash, pay one fee instead of paying multiple fees that might come in when they write a check or facilitate a transaction.

Loudermilk: Interesting. So it sounds like to them this fee, this service, is a benefit.

Harbin: Yes, sir, it is. And we feel it is our responsibility to educate our members and not dictate how they manage their finances and that’s very important because…members want the service, they request the service, they will go elsewhere to get the service if we don’t provide it. And we can see that in transaction history. If we take a member out of overdraft protection, we can see where they go to a payday lender.

Read Harbin’s submitted written testimony.

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