Matz, McWatters Downplay War of Words: It's Business, 'Not Personal'
ALEXANDRIA, Va. — After a week that saw an escalation in the war of words between NCUA Chairman Debbie Matz and board member J. Mark McWatters, both board members sought to downplay their differences in separate interviews with Credit Union Journal.
Matz, a Democrat, and McWatters, a Republican, have differing philosophies, which have shown up during McWatters' brief tenure on the board. He was the lone dissenting vote — a vote that also fell along party lines — against the agency's most recent budget proposal, has claimed that NCUA is ignoring the illegality of its second risk-based capital proposal, criticized what he called NCUA's "FDIC-centric, one-size-fits-all" approach to regulation, and has been vocal in supporting bipartisan legislation that would require NCUA to hold public budget hearings, a move Matz has come out against.
However, things came to a head recently when McWatters told the Pennsylvania CU Association's annual meeting that the regulator was treating credit unions "as Victorian era children — speak when you're spoken to and otherwise mind your manners and go off with your nanny."
In that same speech he also blasted what he called NCUA's "imperious 'my-way-or-the-highway' approach" to regulation.
After news broke of McWatters' criticisms, Matz fired back, saying in a statement that "Professor McWatters would be better served by stepping down from his ivory tower and working with his NCUA Board colleagues to make policy rather than make headlines."
Despite all of that, Matz insisted to Credit Union Journal that the two "have a cordial relationship."
"I've always had a very collegial relationship with all of the board members I've been on the board with, and that includes Democrats & Republicans," Matz said. "I'm very proud of that. I've always reached out to them, and we've always worked well together. Sometimes things in print seem a lot worse than they really are."
McWatters also dismissed the notion of any rift between the two.
"It's a collegial relationship, a professional relationship," he said. "Any focus on these internecine issues among board members doesn't serve a constructive purpose, because it misdirects the debate here, and the debate concerns NCUA policy. To put it in a nutshell, this is not personal with me, and I very much doubt that it's personal with the chair and the vice-chair [Rick Metsger]."
More Washington Dysfunction?
Despite their reassurances, CU Journal pressured the two to answer whether this kind of public sniping sends the wrong message at a time when Congress is pressuring NCUA to hold public budget hearings and generally increase its transparency.
"I don't feel like it's a reflection on me if the tone is not satisfactory," said Matz. "I feel like I do have a very good relationship with members of Congress on both sides of the aisle, and we have serious, substantive conversations."
McWatters responded: "It sends no message at all. To the extent that it sends anything, it's that these guys at NCUA are involved in what they're doing; they're engaged. There is a debate in Congress on these same regulatory philosophies. If you see what's going on in Senate Banking and House Financial Services [Committees], it breaks much the same way. All we are doing is playing out our little drama on a much smaller stage than is going on currently in Congress."
But if the two board members can't get along, isn't that another example of Washington dysfunction?
"As far as I'm concerned, I work well on both sides of the aisle," said Matz, pointing to working relationships with previous NCUA board members Dennis Dollar, JoAnn Johnson and Michael Fryzel. "I believe I work well on both sides of the aisle, and when somebody wants to play a constructive role, I'm happy to join in discussions with them and work with them."
For his part, McWatters said that NCUA is just one part of a larger discussion about income inequality in the United States, and offered the example of U.S. Sen. Elizabeth Warren and U.S. Rep. Jeb Hensarling as corollaries. The two of them, he said, "may appear to be at polar opposites, but in many respects they are speaking the same language."
Finding Common Ground
Matz deflected questions about how the two might get their relationship back on track, and said she is more focused on accomplishing her agenda of regulatory modernization, citing last month's FOM expansion, removal of limits on fixed assets, expanding the definition of what makes a "small" credit union, and more.
But her opportunities for further advancing that agenda could have an expiration date, given that her formal term as chairman has expired, and she currently serves at the pleasure of the president. But that hasn't changed the way she views her job or how she interacts with her fellow board members, she said.
"I don't think the fact that my term has ended has influenced what I say or how I say it," said Matz. "I'm known to speak my mind."
Similarly, McWatters said the relationship remains on track, albeit with differences of opinion.
"This is not personal," said McWatters. "This is strictly business. It's just a difference in regulatory philosophy. There is room for common ground and I think we're making a lot of progress there."