One of the first things Dennis Dollar did after being named chairman of NCUA was to appoint well-known NCUA veteran, Len Skiles, as executive director to run the agency's daily operations.
That was after Dollar accepted the resignations of four Clinton administration appointees packed into the NCUA chairman's office during the brief tenure of Yolanda Wheat. The resignations and the demotion of Wheat's assistant from the specially created job of "special" assistant and legal counsel to the NCUA chairman, effectively erased the controversial expansion of the NCUA chairman's office undertaken by Wheat in her short stay.
Then Dollar, who liberally praised Wheat while presiding over his first NCUA board meeting, walked the corridors of the credit union regulator to meet with the rank-and-file personnel in the federal agency, so often surrounded by controversy and turmoil the past few years. Dollar's message was that it is a new day at NCUA. He stressed two preferences: to seek consensus, and not controversy, and to keep focused on the issue of safety and soundness.
CUs' Role-Not Governments
The lone Republican on the NCUA board, Dollar is a big believer that credit unions should be serving the underserved, but he doesn't believe it is government's role to force them to do so.
"Serving the underserved is what credit unions do. It should always be the driving force in making decisions. However, this agency's primary role is safety and soundness. When we can be an agent of social change we should do so. But we should not mandate a social conscience. Either a credit union has it, or it doesn't," Dollar said. "Government has never been an effective enforcer of social conscience."
The appointment of Skiles, one of the most experienced NCUA executives, to run the agency was aimed at boosting morale. Dollar had argued for three years that the executive director should be a careerist, an experienced NCUA hand, instead of a political appointee hired by the NCUA chairman. "We took a great step with the conversion of the position. Now everybody in the agency no longer reports through a political appointee, but to a career NCUA professional," said Dollar.
Skiles, with NCUA since 1973, is well respected in and outside NCUA and has been centrally involved in all of the major initiatives and controversies over the past decade. As head of NCUA's Asset Liquidation Management Center, Skiles helped liquidate or merge hundreds of credit unions during the 1990s. He helped prosecute the biggest credit union frauds, those at Barnstable Community FCU in Massachusetts and Franklin FCU in Nebraska. He helped liquidate Capital Corporate FCU (CapCorp) in 1995. In more recent years he led internal NCUA task forces investigating top staff in the "reverse discrimination" hiring scandal, and then writing the new FOM rules, based on HR 1151, the CU Membership Access Act.
With his NCUA term expiring in 14 months, Dollar wants to move fast on setting an agenda. His regulatory relief proposal, he calls Reg-Flex for regulatory flexibility, will be on the NCUA board agenda in just two weeks. Dollar sees this as a potential for a whole new regulatory philosophy, something that can be transported to other regulatory agencies. "It's not deregulation and it's not 'one size fits all'. Its a compromise between the two," said Dollar.
A Modest Beginning
Under Dollar's plan some regulations would be eased for well-run credit unions. The proposal starts off modestly, rolling back some restrictions on fixed assets, investments, real estate appraisals, and charitable donations.
But Dollar thinks it can be expanded to include other areas as well. What areas Reg-Flex could be expanded to will be determined when the proposal goes out for public comment next month.
As a former credit union CEO, Dollar has a different perspective on the credit union movement than anybody who has ever headed the NCUA board. He knows what it's like to fill out a call report. He knows what it's like to sit at the table across from the examiners.
It's clear Dollar has been thinking about Reg-Flex for some time. He said when he was the chief operating officer of Gulfport VA FCU, in Gulfport, Miss., he was taken by the inflexibility of the NCUA examiners. As the new NCUA chairman tells it, he wanted to buy an old s&l branch from the Resolution Trust Corp., while retaining the current facility for future use as a data processing center and a drive- through branch. But the examiners told him that his plan would run afoul of NCUA's fixed assets rule, even though his credit union's capital ratio was well over 11%. According to Dollar, the examiners told him he could appeal to the regional offices and go through the waiver process if he wanted to circumvent the fixed-asset rules.
An Old Job's Influence
"There's no question that Reg-Flex was shaped in my days as a credit union manager dealing with one-size-fits-all NCUA regulations. But I never thought I would be in a position to affect that one day," he observed. "So when I got up here (Washington) I began to question some of the rules and say 'why do we have to have the credit unions come to us and ask us for waivers, even if they're well-run, highly- capitalized credit unions? Why do we make credit unions jump through all of these hoops?' It just didn't make sense."
Under Reg-Flex, those credit unions that have proven themselves to be well-run would be spared this process in certain areas, according to Dollar. "It's a compromise between one-size-fits-all regulations and the kind of regulatory discipline some credit unions need."
To Dollar, the Reg-Flex concept could be extended to various areas of the NCUA rules and regulations to loosen restrictions for well-run credit unions. "There are certainly other regulations we could look at down the road. This is a good starting point."
Dollar has other initiatives in his sites. He plans to move to repeal the Community Action Plan, or CAP, approved over his objections by the three-member NCUA board last year. Dollar said he will try to have it rescinded or amended in some way by the time the Community Reinvestment Act-like rule takes affect the first of next year
He is also intrigued by the Bush Administration's faith-based initiative and sees a role for credit unions, perhaps by easing FOM restrictions to allow faith-based credit unions to serve community groups. Dollar has already been in contact with the administration's new faith-based initiatives office to offer his and NCUA's assistance. "We've got resources that could help facilitate this," he said.
