If Mark McWatters is, as expected, confirmed by the U.S. Senate as the newest member of the NCUA board, credit unions will be getting someone with a strong background in both law and business, according to colleagues who have worked with him.
Christopher Hanna, a professor of law and a University Distinguished Teaching Professor at SMU's Dedman School of Law in Dallas, told Credit Union Journal that McWatters left quite an impression on the school in his five years there.
McWatters originally came to SMU in fall 2009 to be an adjunct professor at the SMU Cox School of Business. He later added the responsibilities of being both an adjunct professor and director of graduate programs for the law school in fall 2011.
"McWatters has an incredible resume, and he is one of the smartest people you will ever meet," said Hanna. "[This will be] a huge loss for SMU because he is part of the law school and the business school. His knowledge base is amazing — tax, banking and finance. Credit unions are getting a great person."
McWatters has been very involved in the TARP Congressional Oversight Panel in multiple roles. In 2009 he served as general counsel to U.S. Rep. Jeb Hensarling (R-TX) when Hensarling — now the House Financial Services Committee chairman — was the ranking Republican member of the TARP Congressional Oversight Panel.
McWatters also was counsel to former SEC Commissioner Paul Atkins when Atkins served on the TARP Panel. McWatters was a member of the TARP Panel from December 2009 to April 2011. The March 16, 2011,
In addition to McWatters, other panelists included former Delaware democratic Sen. Ted Kaufman, New York Superintendent of Banks Richard H. Neiman, AFL-CIO Policy Director and Special Counsel Damon Silvers, and Kenneth Troske, William B. Sturgill Professor of Economics at the University of Kentucky.
"It is now clear that, although America has endured a wrenching recession, it has not experienced a second Great Depression," the panel wrote. "The TARP does not deserve full credit for this outcome, but it provided critical support to markets at a moment of profound uncertainty. Even so, the program leaves behind a troublesome legacy: continuing distortions in the market, public anger toward policymakers, and a lack of full transparency and accountability."
The panel's 2011 observations on the "too big to fail" issue seem especially pertinent today, and touch on a debate that continues to rage:
"In light of the TARP's rescue of America's largest financial institutions, it is not surprising that markets have assumed that 'too big to fail' banks are safer than their 'small enough to fail' counterparts. As a result, small banks continue to pay more to borrow than very large banks — an ongoing distortion in the marketplace. By protecting very large banks from insolvency and collapse, the TARP also created moral hazard: Very large financial institutions may decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss."
Appealing To Both Sides
Wayne Shaw has been a professor at the SMU Cox School of Business for 19 years, following earlier stints at Cornell and the University of Colorado at Boulder. When SMU started a tax program last decade, for the first few years Shaw was the only professor. He met McWatters in 2009.
"Mark came highly recommended so I tried him out, and I have been delighted with his work ever since," Shaw said. "He knows how to relate to people — after you talk to Mark you feel better. He also is very knowledgeable. He has the ability to take a complicated topic and bring it down to the student level, which is pretty rare."
Shaw said he worries about McWatters going to Washington because McWatters has the ability to work with people on both sides of the aisle, "Which is not very attractive these days," Shaw noted. "Mark will not compromise his values, but he is willing to listen to what other people have to say. He absolutely will do a tremendous job."
No. 1 In His Class
According to
In 1982 he added a J.D. degree from the University of Texas School of Law in Austin. He later would collect an LL.M from Columbia University School of Law in New York in 2002, and an LL.M in taxation (concentration in International Taxation) from New York University School of Law in 2003.
After clerking for Judge Walter Ely, U.S. Court of Appeals, Ninth Circuit in Los Angeles, 1982-83, McWatters held a series of positions as an attorney: First for McGinnis, Lochridge & Kilgore in Austin; then at Hughes & Luce in Dallas; Fulbright & Jaworksi in Dallas; and Patton Boggs in Dallas. He also served as tax and M&A counsel for HBK Capital Management in Dallas from August 2007 to April 2009, before transitioning to the academic side.
Shared By Two Schools
Professor Hanna noted he was one of the people who recommended McWatters to SMU's Cox School of Business in 2009.
"I have the sense that at first it was on an experimental basis, but very soon they wanted him to teach more," Hanna recalled. "Not long after that we were able to pry him away to teach at the law school as well. Both schools now share him."
Shaw said McWatters has proven himself not only in the academic world but also in the political world.
"Mark was part of TARP, which was a crazy time, and I have heard from many people he did a tremendous job," Shaw said. "He has a thirst for learning and loves to take on new things. He will be prepared when he walks in the door. He will bring no prejudgments to the situation, and I wish we had more people like that in Washington. He is the kind of guy an industry should have as a regulator."
If confirmed, McWatters would succeed Republican Michael Fryzel, whose six-year term on the NCUA board expired Aug. 2, 2013. McWatters would join Chairman Debbie Matz and Richard Metsger, both Democrats.
McWatters, who is under a media blackout until after the confirmation process, appeared before a Senate Banking Committee for a confirmation hearing on March 13. During his testimony, he appeared to agree with the current NCUA's board's tight focus on safety and soundness as well as avoiding risk.
He also outlined a concern for addressing risk — no matter the size — within the credit unions that could threaten the Share Insurance Fund and the entire CU industry.
"I am convinced that regulators should remain mindful that the root causes of seemingly intractable problems are often embedded not in the esoteric, but in the commonplace," stated McWatters at the hearing. "As such, my focus as a regulator will remain straightforward: Don't neglect the fundamentals of capital, liquidity, and transparency, and always remember that the greatest threat to a financial system may reside where you least expect it — hidden within plain view."
