Rep. Bill Foster (D-Ill.) introduced legislation to strengthen oversight of credit union service organizations and other third-party vendors.
Details: The Strengthening Oversight for the Financial Sector Act would give the National Credit Union Administration and the Federal Housing Finance Agency the authority to oversee third-party vendors used by the entities they regulate.
More: Foster noted that authority over third-party vendors was previously granted to the NCUA, but it expired, leaving a gap in oversight.
Background: A version of this legislation passed the House Financial Services Committee in the 117th Congress but did not receive a floor vote.
Lack of CUSO Oversight: Current law permits credit unions to outsource technology and certain services to credit union service organizations, which are not subject to the same examination and supervisory framework that applies to bank service providers.
ICBA View: ICBA has long advocated for legislative changes to grant the NCUA equivalent third-party oversight authority to ensure greater regulatory parity across the financial services sector, including in letters to lawmakers and in congressional testimony.