National Association of State Credit Union Supervisors
September 8, 2004
Mr. Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: Proposed Rule for Fair Credit Reporting Medical Information
Regulations
To Whom It May Concern:
About NASCUS
The National Association of State Credit Union Supervisors (NASCUS)
is a professional association representing the forty-eight (48) state
and territorial regulatory agencies that supervise the nation's 4,090
state-chartered credit unions. NASCUS has been committed to enhancing
state credit union supervision and advocating for a safe and sound
state credit union system since its inception in 1965. NASCUS appreciates
the opportunity to submit comments on the FACT Act and its implications
to state-chartered credit unions.
NASCUS realizes the May 28, 2004 deadline for submitting comments
concerning the Fair Credit Transaction Act of 2003 (FACT Act) has
passed. However, at the request of the Federal Reserve, NASCUS submits
this letter for your consideration.
Fair
Credit Reporting Medical Information Regulations & State-Chartered
Credit Unions
Section 411 of FACT Act contains provisions designed to protect
a consumer's medical information from being used or furnished in
connection with a credit report or shared with all but an affiliate
organization. Section 411 of the FACT Act amended Fair Credit Reporting
Act (FCRA) Sections 604 and 603, respectively.
As you know, the FACT Act created a process by which enumerated
federal agencies could construct regulatory exceptions exempting
financial institutions from the medical information prohibition.
However, the Federal Trade Commission (FTC), which has enumerated
powers over state-chartered credit unions, was not included in those
provisions and this negatively impacts state-chartered credit unions.
NASCUS does not believe Congress intended to exclude not only state-chartered
credit unions, but other financial service providers under jurisdiction
of the FTC. Certainly, there is no indication in the Congressional
Record that this was the result of anything other than legislative
oversight. NASCUS strongly urges the Federal Financial Institutions
Examination Council (FFIEC) to act decisively to remedy this situation.
If allowed to continue, this legislative oversight will have a detrimental
impact of state-chartered credit unions and to millions of consumers
who seek these financial services from state-chartered credit unions.
State-Chartered Credit Unions Not Granted Exception for Medical Information
As stated earlier, the wording providing enumerated federal agencies
the right to provide exemptions for medical information in the FACT
Act was not provided to the FTC. Therefore, state-chartered credit
unions were not granted the same exceptions as other financial institutions,
including federally chartered credit unions regulated by the National
Credit Union Administration (NCUA).
State-chartered credit unions provide the same financial services
to consumers as federally chartered credit unions. In fact, the business
and operations of state-chartered credit unions are substantially
similar to federally chartered credit unions.
It makes no business sense to deny state-chartered credit unions
exceptions that permit them to obtain or use medical information
in connection with credit eligibility determinations where necessary
and appropriate; the same exceptions are provided to federally chartered
credit unions. The uses of medical information by state-chartered
credit unions for credit eligibility determinations are no different
from federally chartered credit unions. We believe both uses are
consistent with the Congressional intent for granting the exception
for medical information.
This inconsistency in applying the FACT Act creates an unequal playing
field for state-chartered credit unions. In fact, state-chartered
credit unions are prevented from performing the appropriate due diligence
in their credit eligibility operations. This poses a risk to safety
and soundness. In addition, as referenced above, consumers are negatively
impacted.
Solution for State-Chartered Credit Unions
NASCUS respectfully requests the Federal Financial Institutions
Examination Counsel (FFIEC) to grant the same exceptions to medical
information provided to other financial institutions in the FACT
Act. Congress intended these exemptions for financial institutions,
including state-chartered credit unions. These exceptions are crucial
to state-chartered credit union lending operations and potentially
threaten safety and soundness if a state-chartered credit union cannot
access information that would lead to solid credit eligibility determinations.
The exemptions for medical information provides for integrity in
the lending practices for state-chartered credit unions. If you have
any questions, or wish to discuss this matter further, please do
not hesitate to call me directly. I may be reached at (703) 528-8688.
Sincerely,
Mary Martha Fortney
President and CEO
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