Two major industry developments this week signal evolving challenges for community financial institutions: the CFPB’s push to protect abuse survivors from credit reporting harm, and NCUA data showing credit unions balancing growth against rising consumer stress. Here’s what you need to know about both.
1. CFPB Launches Initiative to Address Financial Impact of Domestic Abuse on Credit Reporting
The Consumer Financial Protection Bureau (CFPB) has initiated a rulemaking process aimed at addressing how credit reporting impacts survivors of domestic violence and elder abuse, mainly focusing on debt and accounts that were coerced or fraudulently created by abusers.
“People trapped by domestic abuse must often sign documents under the threat of violence, ruining their financial lives and making it even more difficult to escape,” said CFPB Director Rohit Chopra. “Expanding identity theft protections could help survivors rebuild their financial lives and would ensure that our credit reporting system is not used as a tool for domestic and elder abuse.”
This rulemaking process highlights a critical intersection between financial services and social issues many financial institutions may not fully appreciate. The statistics are stark - nearly three-quarters of domestic violence survivors report staying in abusive relationships longer due to coerced debt, with women of color facing nearly double the average debt burden.
This initiative presents an opportunity for credit unions and community banks to evaluate their procedures around fraud detection, identity theft protections, and support services for vulnerable members, potentially positioning themselves as leaders in addressing financial abuse through enhanced member services and education.
For more on this topic, see our discussion with CU Sol CEO Johnathan Taylor and their work to provide services and products designed explicitly to domestic abuse victims:
Comments on the proposed rules, which expand the definitions related to identity theft in Reg V, are open through March 7th.
2. Credit Union Q3 Data Shows Growth Amid Rising Consumer Credit Concerns
The NCUA’s third quarter 2024 data reveals a complex picture of credit union performance, showing growth in assets and deposits and concerning trends in loan delinquencies and net income, particularly in consumer lending categories.
“The credit union system remains healthy overall but with several mixed signals,” NCUA Chairman Todd M. Harper said. “For the year ending in the third quarter of 2024, assets, loans outstanding, insured shares and deposits, and net worth all grew. Yet, net income declined year-over-year, and we experienced anemic loan performance along with rising default rates. Credit card and auto loan delinquencies remain especially elevated. The NCUA, therefore, continues to urge credit unions to carefully manage their credit risks in this time of growing financial stress among members.”
The diverging trends in this report paint a telling picture of the current economic environment facing credit unions and their members. While the 24% growth in share certificates reflects members seeking higher yields in a high-rate environment, the rising delinquency rates in consumer lending categories suggest growing financial stress among households.
This data underscores the importance of robust risk management practices for credit union leaders while highlighting the delicate balance between maintaining strong asset growth and managing credit quality in an uncertain economic climate.
That’s a wrap for this week. Tis the season for those holiday classics. Click below to let us know how we did: