WASHINGTON — Mark McWatters shared insights into what kind of regulator he would be if confirmed to a seat on the NCUA board during testimony before the Senate Committee on Banking, Housing, and Urban Affairs Thursday.
And what he revealed appears to conform with the current board's tight focus on safety and soundness as well as avoiding risk.
If confirmed, McWatters would succeed Republican Michael Fryzel, whose six-year term on the NCUA board expired last August. McWatters would join Chairman Debbie Matz and Richard Metsger, who are both Democrats. (The committee will vote on his confirmation at a later date.)
McWatters 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. "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."
McWatters noted that his background suits him well for an emerging regulatory period that is more complicated, pays close attention to capital levels and employs new risk-based capital formulas.
"If confirmed, I will bring my 30-plus years of legal experience, accounting training, general understanding of the broader financial markets, an open mind, and a risk-based, market-oriented, targeted and transparent regulatory perspective to address the increasingly complex and sophisticated issues facing credit unions," he said.
McWatters also pointed to his leadership skills, having been honed in the private and public sectors. That background, he said, taught him "valuable lessons on leadership and responsibility, including the importance of: finding common ground, paying attention to the fundamentals, earning trust, and never forgetting that real people are affected by your decisions. As a result, these experiences have provided a solid foundation and comprehensive skill set for evaluating the important policy issues now facing the NCUA Board."
Besides being the only Republican on the board, McWatters brings to his seat no credit union experience. But he focused on his broad knowledge of the financial system and his dedication to the CU movement.
"Through my education and work, I have developed a broad knowledge of the financial services industry and an understanding of the heavy responsibilities of regulators. NCUA plays a critical role as a regulator and insurer to protect the hard-earned savings of more than 96 million Americans in an industry with more than $1 trillion in assets. If confirmed, I will work diligently to ensure the continued integrity and safety and soundness of our nation's credit union system in an ever-evolving marketplace."
McWatters emphasized his willingness to partner with Matz and Metsger, pointing to his government experience and track record of working well across party lines.
"While on the TARP Congressional Oversight Panel, I sought to balance and respect different perspectives, and reach consensus based upon a set of overarching principles, just like I now practice in the classroom," said the assistant dean for graduate programs and an adjunct professor at the Southern Methodist University Dedman School of Law. "Ultimately, my colleagues and I worked to produce an accurate, non-partisan analysis of the TARP and the financial crisis.
"I'm pleased that of the 15 reports the panel issued in my tenure, 14 were unanimous," he noted. "We achieved this result by working together in an open and respectful manner, with the goal of finding a common ground and working cooperatively through any differences. If confirmed by the Senate, I will bring this same approach to my work with my NCUA Board colleagues, NCUA staff, state regulators, and external stakeholders.
