WASHINGTON-Should Carla Leon-Decker be approved by the Senate for a seat on the NCUA board, credit unions won't be able to complain she doesn't know anything about the challenges smaller CUs face in making money.
Leon-Decker, CEO of District Government Employees FCU in Washington, has seen her credit union report losses each of the last four years. DGEFCU lost $1.3 million from January 2007 to December 2010; ($119,797 loss in 2007, $369,282 in 2008, $483,946 in 2009, $322,790 in 2010). Through September 2011, however, the credit union has reported more than $70,000 in net income.
While CEO performance is not stipulated in the Federal CU Act as a qualification to take an NCUA Board seat, Dale Verderano, CEO of $130-million Matadors Community CU in Chatsworth, Calif., said, "If this CEO cannot manage her own small credit union, why would we want her to set rules and regs as a regulator?"
But DGEFCU's capital is strong, at 10.48% as of the September 2011 Call Report. However, that figure was boosted in part by a $1.5-million infusion of secondary capital through the Treasury Department's Community Development Capital Initiative. Without that TARP assistance, DGEFCU's capital ratio would be substantially lower. One person, requesting anonymity, predicted that should Leon-Decker go before Congress it's likely there will be some tough questions about the CU's performance and the TARP funds.
Marvin Umholtz, president of Umholtz Strategic Planning and Consulting in Olympia, Wash., said another factor could be at work. "I realize her performance as CEO does not violate any laws. Still, I would think this is an odd choice, given the universe of people out there who could serve on the NCUA board. This seems to be more ideological or might have more to do with party connections than anything else. Perhaps this nomination is just a placeholder and the White House anticipates Republicans will block the nomination anyway."
Opinion On Dodd Frank
Verderano has other concerns with the board choice. "We need a nominee who understands not only the challenges of small credit unions but also large credit unions when subjecting them to additional costly regulations. We need to know the nominee's opinion of the Dodd-Frank Act, the Durbin Amendment, and her expectations of the new office of Consumer Protection. Perhaps Congress will bring out these answers in the confirmation process. This nominee should be scrutinized by trade organizations to make sure she is well qualified and will look out for the interests of all credit unions when interpreting rules and regulations. They should not just arbitrarily give her a passing nod."
NAFCU President Fred Becker, who used to work in the White House during the Reagan administration, said he is very familiar with nomination process and is certain the White House fully vetted Leon-Decker's qualifications and the status of her CU.
CUNA President Bill Cheney issued a statement saying, "We appreciate the White House nominating to the NCUA board an individual with credit union experience, which we believe is important when appropriate safety and soundness policy is under consideration."
Evan Clark, CEO of the $260-million Department of Commerce FCU in Washington, supports Leon-Decker, saying if her nomination to the NCUA board is approved by the Senate she will be a good advocate for credit unions.
As for DGEFCU's financial struggles, Clark offered, "Carla's attempting to do what so many in the industry I think would like to do-serve the underserved in a big way. Her credit union is trying to serve the folks in the Columbia Heights area of Washington. Although it is a changing neighborhood there are still many people there who live at or below the poverty line. These are the people Carla's credit union is reaching out to. When the economy turns down who are the first affected? Typically it is those of modest means. And if your credit union is reaching out to those persons, your credit union will be impacted in a big way. I think the economic downturn has impacted her credit union much more than some others in the region because of what they are attempting to do-an effort I applaud."
Mike Beall, president of the Missouri CU Association, worked closely with Leon-Decker over the last 10 years when he headed the Maryland/DC CU Association. He, too, believes the CU's losses resulted from Leon-Decker expanding her charter and branch footprint in an attempt to serve more of the underserved market in Washington. "Her move just came at a bad time, when the recession hit hard," observed Beall. "Plus the D.C. government has continued to get smaller and leaner. So Carla's credit union has had to manage through that transition as well."
Back in Black
September Call Report data show District Government Employees' net income at $71,762 after NCUSIF premiums and corporate stabilization expenses. "It comes down to the fact the credit union made some tough decisions for its future and the future of those in the community," added Beall. In the long run, DGEFCU will be better for Leon-Decker's decisions, asserted Beall. "I think you can look at the credit union's recent financial performance numbers and have questions about the nomination. But you have to see the bigger picture-the credit union had to spend money to grow. Carla has taken the credit union that was stuck at $25 million in assets to almost $50 million today."
Credit Union Journal reached out to Leon-Decker for her comments, but according to NCUA, White House policy prohibits nominees from speaking with the media during the nomination process.
