WASHINGTON – Credit unions and Capitol Hill are still scratching their heads over the surprise White House nomination of National Credit Union Association Board Member Mark McWatters to the Export-Import Bank.
McWatters was tapped to take over an empty position at the Export-Import Bank last week, not even two full years into his six-year term as a board member—and as NCUA Chairman Debbie Matz is marking her ninth month as holdover, as her term officially expired in April 2015.
McWatters' nomination also comes after Obama withdrew Patricia Loui-Schmicker—a Democrat nominated to the Export-Import Bank in March 2015, but was never confirmed.
A confirmation of a third board member to the Export-Import Bank is essential because without having the required three members to reach quorum the bank cannot make loans over $10 million.
"The Export-Import Bank helps businesses of all sizes grow, compete, and create jobs, and it must have a quorum to approve deals over $10 million," Sen. Sherrod Brown D-Ohio said in a statement. "Every week Congress delays action on the President's nominees puts American jobs at risk."
However, in an interesting twist, McWatters has close ties to Chairman of the House Financial Services Committee Chairman Jeb Hensarling, R-Texas, who has been one of the biggest opponents of the Export-Import Bank. McWatters served as counsel to Hensarling in 2009.
While nominating a Republican with close ties to Congressional leadership could help the White House get the confirmation it seeks, it might face an uphill battle as there are more than a dozen presidential nominations who are yet to be confirmed.
A confirmation would also have to go through the Senate Banking Committee Chairman Richard Shelby, R-Ala., who is currently in his home state revving up for a March 1 primary and unlikely to prioritize confirmation hearings until after that election.
But part of McWatters' appeal as a nominee to the beleaguered Export-Import Bank is that he combines several key features: his close ties to Republican leadership, he's well-known to the influential Democratic Sen. Elizabeth Warren (having served with her on the TARP Congressional Oversight Panel), and he made it through the confirmation process successfully once before.
While a confirmation of McWatters to the Export-Import Bank would bring a quorum, it would also leave the NCUA short-handed. Chairman Matz has seen her term expire and is serving as a holdover until Obama nominates her successor.
There are currently two democrats on the NCUA board, and assuming McWatters departs for the post at the Export-Import Bank, that would mean two open seats on the CU regulator's board. (NCUA Board Vice Chairman Richard Metsger's term officially ends in August 2017.)
The big question, some suggested, is how much longer Matz will continue to serve as a holdover, potentially pushing the question of what NCUA will look like post-Matz to 2017.
When asked how long she plans on remaining with the regulator, Matz told Credit Union Journal, "I am happy to continue my service at the pleasure of the president."
One primary difference between NCUA and the Export Import Bank is that NCUA would not be so hamstrung by the loss of quorum. The credit union agency has operated with just two board members — and even just one board member — previously.
Over the years, there have been a number of times when NCUA has operated with just two board members, but being down to just one board member — a possibility if McWatters is confirmed to the Export-Import Bank and Matz chooses to leave before either her or McWatters' successors are in place — has happened only twice in recent memory.
The last time the regulator was down to just one board member was in 2005, when then-NCUA Chairman JoAnn Johnson, a Republican from Iowa, was flying solo while two appointees—Republican Rodney Hood and Democrat Gigi Hyland—were awaiting confirmation by the Senate.
But that wasn't the first time. From January to March of 2002, then-NCUA Chairman Dennis Dollar, a Republican from Alabama, served as the lone board member as a result of Democrat Geoff Bacino's recess appointment expiring just as Democrat Yolanda Wheat departed the board.
Dollar – now a principal at Dollar Consultants in Birmingham, Ala. – held one regularly scheduled board meeting while he was the only seated board member and took one action by notation vote, setting the precedent that a one-member board can legally act.
"After Geoff Bacino's recess appointment ended at the same time Yolanda Wheat left the board in early 2002, I was left as the one-member NCUA Board for about eight weeks until JoAnn Johnson and Debbie Matz were appointed to the board," Dollar recalled. "I jokingly called it the time of the greatest unanimity of direction in the history of NCUA but, seriously, I felt it was important to establish a precedent that the NCUA Board could continue to function even if it went down from three members to a single member at any future point in time.
Though the McWatters' nomination to the Export-Import Bank took the credit union industry by surprise, Capitol Hill observers suggested this is a "slow-motion event." The Texas Republican quickly issued a statement that he would
In addition to Shelby being focused on his primary election at least until March 1, some have suggested that presidential nominations typically go on "lockdown" during a presidential election year, particularly with a Republican-controlled Senate dealing with nominations from a lame-duck Democratic president.
