The every-so-often call to increase the size of the board of the National Credit Union Administration (NCUA) has once again been heard in recent legislation introduced in Congress. If passed, the measure would increase the board from its current three members to five.
Those who have favored such a move believe that having two more voices on the board would mean greater representation of the industry. Some feel that two additional individuals will mean there will be more and better ideas on how to improve the regulation of credit unions and perhaps provide new ways to give the industry more flexibility in the financial market place.
Those who are not fond of the idea of a bigger board point to the substantial expense of adding two more board members (and their staffs) and believe that nothing positive would be gained by having two more individuals voicing their opinion and voting on issues.
The reality of government and politics is that sometimes people believe that if they perceive a problem the way to solve it is to throw money at it. That is one of the principle reasons our government is so large and bloated. Rather than look to efficiencies we look to a bigger bureaucracy to handle the problem.
Unlike private industry that strives to be leaner and more efficient to please shareholders, elected officials at times believe the way to please their shareholders—aka the voters—is by spending more money to appease a group's narrow interest.
An honest analysis of how the NCUA board operates can only lead to one conclusion. Increasing the size of the board will not in any way improve the operation of NCUA or create a better regulatory environment for the industry.
All one needs to do is look at what recently occurred when the board was at full strength. Every issue voted on was along party lines. The list of 2-1 votes grew longer after each monthly meeting. Had it been a five member board the roll call vote would have been 3-2. The outcome would have been the same, and we would have had to listen to two more people explain their position on the issue.
It is difficult to justify the belief that additional board members are better. I know of no credit union, or trade association for that matter, that would advocate making their boards bigger. If asked, most CEOs would prefer a smaller board.
NCUA has had a three-member board since its inception. Its members have been both good and bad. Some get very involved in the work they do and others just get by. But that is human nature and exists in every industry and at every level of government. Overall however, the outcome of the decisions made has been more positive than negative. And in life that can be considered a pretty good percentage.
An NCUA Chairman from a long time ago had a sign on his desk that read "If it ain't broke, don't fix it." Ed Callahan was on point with that advice. The structure of the NCUA board is not broken. It needs to be left alone.
Michael Fryzel is a former NCUA Board chairman and is currently an attorney in Chicago.
