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FDIC Federal Register Citations

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:


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.

Mary Martha Fortney
President and CEO


Last Updated 09/09/2004

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