McWatters' CFPB bid hasn't even been announced. Is it already in trouble?
J. Mark McWatters has not yet been named to head the Consumer Financial Protection Bureau, but he’s already finding himself in the hot seat.
The Washington Post published a stinging investigative story late last week about the top credit union regulator’s history of telecommuting from his home in Dallas — roughly 1,200 miles from the National Credit Union Administration’s headquarters in Alexandria, Va.
The report could complicate expectations that the White House plans to name McWatters as permanent head of the CFPB next month.
McWatters has reportedly conducted the bulk of his work out of Dallas for several years, after being appointed to the NCUA as a Republican board member in 2014. But the arrangement seems to have caused some friction among top officials even before he took over as chairman last year, according to the Post, which described a heated exchange between McWatters and former Chair Debbie Matz over the issue at an agency board meeting in early 2016.
“I couldn’t imagine doing the job as chairman effectively if I wasn’t in the office every day interacting with the regulatory staff, attorneys, and other regulators at other financial services agencies,” Matz told the paper recently.
On top of that, despite working out of his home the majority of the time, McWatters spent $22,000 on furniture for his Alexandria office, the Post reported. He is also alleged to have contracted limousine services “dozens” of times for travel and spent an estimated $12,000 to fly from Dallas to Barcelona for a conference last year.
The question now is whether these findings — which did not seem to gain widespread attention over the weekend — present a roadblock to his potential nomination as CFPB director.
The White House must name someone to the position by June 22 under the Federal Vacancies Reform Act in order to keep acting Director Mick Mulvaney at the agency while a nomination is pending.
Still, while the optics of the report are politically troublesome, there are signs the revelations may not be a deal-breaker for the administration. Spending allegations have plagued several Trump administration officials over the past year and a half, including Secretary Ben Carson of the Department of Housing and Urban Development, and Scott Pruitt, head of the Environmental Protection Agency, and both still remain in office.
At the least, the report complicates what has already been a challenging search process to fill the director’s seat, given how sharply divided Democrats and Republicans remain regarding the CFPB’s very existence.
While the White House would ideally like to fill the position with someone like Mulvaney — a longtime critic of the agency who has been working quickly to overhaul its functioning — Republicans maintain only a one-seat majority in the Senate, affording the administration little wiggle room in getting a nomination through the chamber. That’s made it difficult to find the right person for the job.
This latest report against the chief credit union regulator gives Democrats more potential ammunition against McWatters, should the administration move forward with his nomination. Although some may argue that the concept of remote work shouldn’t be so controversial, even for an agency head, the news is likely to make for a distraction during a confirmation battle.
McWatters was always set to face a host of difficult questions if tapped to head the CFPB. But if he gets the nomination now, the interrogation will be that much tougher.
Bankshot is American Banker’s column for real-time analysis of today's news.