What Rules Will McWatters Pending Departure Impact?
January 12, 2016 3:49 PM
McWatters Pending Departure
The surprise announcement that President Obama nominated J. Mark McWatters to the Export-Import Bank Board four years before McWatters term on the NCUA Board was set to expire wont immediately create a vacancy on the three-member board, as the nomination still must go through the Senate confirmation process. But the move has still put credit unions on edge.For one thing, McWatters has been extremely popular with credit unions, having criticized the much-hated risk-based capital rule and gone head to head with NCUA Chairman Debbie Matz on a number of other issues near and dear to credit union executives hearts.For another, credit unions had been waiting for the moment when the president would nominate someone to the NCUA Board, not take someone off of itafter all, Matzs term on the board expired nearly nine months ago.Here is a look at NCUA initiatives that are still pending for 2016.
Field of Membership
Credit unions have been eagerly waiting for NCUA to approve its proposed changes to the field of membership rulethe first overhaul of the FOM provisions in more than a decade.Related link: Special Report: Field of Membership
Member Business Lending
Another keyand popularprovision credit unions are waiting for NCUA to approve is its proposed changes to its member business lending rules. How do you know if credit unions are going to be happy with a new regulation? When banks hate it. And banks hate this one so much the Independent Community Bankers Association is already threatening legal action if NCUA moves forward with the proposal.Related link: Field-of-Membership Clash Between CUs, Banks Takes Nasty Turn
Supplemental Capital
During the turmoil over NCUAs risk-based capital rule, one issue credit unions repeatedly brought up was the need for supplemental capital. Late last year, NCUA urged Congress to address the issue of allowing credit unions some form of alternative capital, and the regulator is at work on a supplemental capital rule even as it pushes Congress to act on the legislative front.Related link: NCUA Urges Passage of CU Supplemental Capital Bill
18-Month Exam Cycle
Credit unions have also been calling on NCUA to revert to its pre-financial crisis examination cycle of 18 months, rather than the 12-month cycle it adopted during the crisis. At the November NCUA board meeting, Matz said the agency "is not locked into an annual exam cycle every year. In future years, we may consider moving back to an 18-month exam cycle for credit unions that pose less risk to the Share Insurance Fund. However, in 2016, we still plan to examine all federally insured credit unions with assets over $250 million, as well as all federally chartered credit unions." Not surprisingly, credit unions preferred what McWatters had to say on the topic. "Regrettably, the NCUA seems to have forgotten that it is not 2008, but, 2015 and that the credit union communityin the NCUA's own assessmentis strong and resilient," McWatters said. "That the top-tier of credit unions require examination every 12-months at enormous cost to the community is worthy of challenge and rigorous debate. That the agency would back-burner this approach without discussion among the board offices also evidences the lack of transparency within the agency." Related link: Has the Time Come for an 18-Month Exam Cycle?
Revamping the Appeals Process
An initiative that McWatters had been championing was to revise the agencys appeals process to make it easier for credit unions to appeal the results of their examinations. Geoff Bacino, a former board member and now a partner at consulting firm Bacino & Associates, suggested that while McWatters will remain committed to continuing his work at NCUA until such time as his appointment to the Ex-Im Bank is confirmed, the fact that he likely is on his way out could have an impact on his ability to push his pet projects through. Some of those initiatives that credit unions were excited aboutthe exam cycle and appeals process? Well, you can probably kiss them goodbye.Related link: CUs Deserve A Better Appeals Process: McWatters
NCUAs Budget Process
Credit unions have long bemoaned the fact that the agencys budget processincluding how it calculates the overhead transfer rate (OTR)doesnt include a requirement for public hearings and public comment. Chairman Matz is expected to call for a vote at next weeks board meeting on publishing the OTR calculation methodology in the Federal Register.Related link: NCUA Budget Process Under Scrutiny In House Financial Services Committee l
