Credit unions were urged to protect their members’ stimulus payments – and by extension, the reputation of their industry – under the recently enacted, $1.9 trillion American Rescue Plan from collection, garnishment, and the right of offset during remarks Tuesday by their top federal regulator.
Todd Harper, chairman of the National Credit Union Administration (NCUA) Board, pointed out to participants of a Maine Credit Union League town hall meeting on Monday that lawmakers intended for consumers to spend the stimulus payments on necessities like food shelter, utilities, and medical care. He likened institutions that would dip into these funds for other purposes to “pickpockets.”
Harper noted the American Rescue Plan, the latest federal measure enacted to help mitigate the economic impacts of the COVID-19 pandemic, lacks needed prohibitions on a financial institution’s tapping depositors’ stimulus funds, and he noted his concern that some institutions may shortsightedly decide to access these funds to pay for overdraft fees, outstanding debts, and other liabilities. “Financially stressed American consumers deserve better treatment,” he said.
Calling credit unions as “financial first responders” that support their members in time of need, Harper pointed out that many credit unions have already voluntarily decided to protect their members’ relief payments. However, he said a “small number” may choose a different course. “Like a pickpocket on the subway, they may grab the stimulus money meant for daily living expenses from their members,” Harper said. “Credit unions that do so should fear the reputational risk they will face by failing to accommodate the needs of their members during tough times. Such practices will sacrifice the long-term financial viability of their credit union and create negative publicity for the entire credit union system.”