Becker Sees Tougher Year Ahead
Credit Union Times: What have been the high and low points of 2009 for NAFCU and the credit union movement?
Fred Becker: The low points for the movement were the problems with the corporates and the potential to be swept in under regulations aimed at those who caused the crisis. The high points have been getting the Temporary Corporate Stabilization Fund passed in less than eight weeks and the health of the credit union brand. Credit unions are getting a lot of earned media because banks aren't doing well and people are turning away from them. People are turning away from convenience in favor of trust. And credit unions are all about trust. Both President Bush and President Obama mentioned us favorably.
CU Times: And even the Pope mentioned credit unions.
Becker: I don't know [if] there was a low point for NAFCU. We started the year in the black and will finish it in the black. Our lobbying, regulatory affairs and compliance teams did a marvelous job. [House Financial Services Committee] Chairman Barney Frank didn't lose a vote until last week when the committee passed the amendment we supported to raise the CFPA [Consumer Financial Protection Agency] threshold to $10 billion. Also, the fix on the credit card bill.
CU Times: You say the public has a better perception of credit unions. Has that been reflected on Capitol Hill?
Becker: Most of them belong to one. And they hear from people and read the positive things written about us.
CU Times: You had to be on your toes this year because of all the activity. Given the proconsumer tilt of the Congress and in the administration, what are you worried about in the short- and long-term.
Becker: CFPA, credit cards, overdrafts, systemic risk, all those things will have to be dealt with in the Senate.
CU Times: Will the CFPA carve out for most credit unions stay in the Senate?
Becker: NAFCU believes that no credit unions should be subject to CFPA. That's not the position of the House and of Senate Banking Committee Chairman [Christopher] Dodd, though ranking member [Richard] Shelby opposes CFPA from square one. We have a number of concerns about the Dodd bill and who would be covered by the systemic risk provisions. Also, on overdrafts, we are worried. The person who testified represented a small credit union for postal workers. And we have to be concerned about the impact of regulations on small credit unions. The bigger ones like the Pentagon Federals can do things in terms of economies of scale to save money that smaller ones can't.
CU Times: What will happen on overdrafts?
Becker: I think they will try to do something in both chambers.
CU Times: How is the Obama administration different to deal with than the Bush administration?
Becker: They are interested in reaching out. They reached out on CFPA, health care, the H1N1. Their reaching out is an effort to sell their agenda. They want to sell their agenda and move it forward. I can't say we've been able to change their position on our items. They try to sell it, while the previous administration just moved forward with it.
CU Times: The conventional wisdom is that Democrats are more proconsumer. Do you agree with that assessment?
Becker: I don't buy it. I think it's driven by what's happened over the last few ye
ars with regard to the economy. Whoever would be in there would be taking steps to see that what happened doesn't happen again.
CU Times: How has the NCUA changed under the new leadership of Chairman Matz?
Becker: I didn't have any difficulty sitting down talking to [former Chairman Michael] Fryzel and don't have any problems talking to Chairman Matz, though both have very different personalities. When she sees an issue like the credit card fix or capital, she tends to convene a meeting to be sure she has a sense of what all sides are thinking. But in the end, we end up in the same place as we would have ended with Chairman Fryzel.
CU Times: You and others on your staff and people at credit unions often complain that what the board members say doesn't always translate into policies executed by rank and file employees. Has that gotten any better in the past couple of months?
Becker: That will take months, not years. And it's endemic to any organization. The new head of the ABA said one of his goals is to work for greater synchronization between FDIC headquarters and the examiners. That's why Chairman Fryzel centralized the chartering process at headquarters rather than having done differently in each region.
CU Times: What are the biggest complaints from your members about the NCUA?
Becker: The agency says take it easy on E part of CAMEL, but I don't know that, that translates to the examiners. The examiners want to be sure the credit unions don't get into trouble so they tend to be more aggressive in telling them what to do.
The folks at the agency bear some responsibility for what went wrong-as did many people-and it bothers me when they don't accept responsibility for it.
CU Times: What did the trade associations do wrong?
Becker: One trade association [CUNA] had people on the board of U.S. Central. But in all the trade associations, people weren't paying as close attention to what was happening at the corporates as they should have. They let the corporates do their own thing, and we got into a situation where things revolved around the corporates. That was a mistake and things should have evolved around the natural person credit unions.
CU Times: Looking forward, what can the trades and the NCUA do to mitigate that in the future?
Becker: Pay more attention to what's going on. Everyone thought the corporates knew what they were doing, and the NCUA had an examiner there and "we don't have to worry about it." We failed to see that the larger corporates posed some systemic risk and failed to monitor them accordingly.
CU Times: What other regulatory issues will be coming down the pike?
Becker: On corporates, we'll need something to perform the functions that corporates do. They are already out there and set up.
CU Times: What about on other subjects?
Becker: Any one regulation that came out this last year would be a full-time job for a credit union compliance officer.
CU Times: What will happen to the economy and credit unions?
Becker: The two aren't the same. The economy will improve but that won't be case for credit unions, which will have a tougher year than this year. For whatever reason, whatever waves go through the economy hit banks and credit unions later than other institutions. So we'll continue to suffer somewhat. It also depends where you are located and that affects credit unions because most aren't diversified in terms of location. Things will get better in 2011, but depending on the health of the industry, credit unions may face higher premiums.
CU Times: What about consolidation?
Becker: We think things will plateau at 5,600 or 6,000 in four or five years. People are more cautious about mergers as a way to grow because of the economy.
CU Times: Last question, are you going to apply for Dan Mica's job?
Becker: No. I'm very happy here.