NCUA’s Fenner Reflects on the Lessons He’s Learned
ALEXANDRIA, Va. — Before Robert Fenner joined the NCUA as a staff attorney immediately after graduating from George Washington University Law School in 1974, he “didn’t even know what a credit union was.”
As he leaves the agency, the 62-year old Missouri native has done more than almost anyone to shape the credit union industry.
Fenner, who was the NCUA’s general counsel from 1985 until his retirement on Aug. 1, has been involved in all of the NCUA’s major rulemakings and several crises, including one that he feared could have done even more damage to credit unions.
In an interview with Credit Union Times, he said the NCUA board’s unwillingness in 2002 to enact stronger regulations on concentration limits for corporate credit unions contributed to the corporates’ mortgage-backed securities losses. The agency ultimately conserved five corporates.
“It taught us an important lesson about how having good, balanced regulations can really help,” he said. “But the board remedied the past mistake last year when it approved strong corporate credit union regulations.”
Fenner didn’t discuss the agency’s internal deliberations before the NCUA board’s 2002 decision not to strengthen the regulations.
However, he said the corporate credit union crisis could have been worse if the Credit Union Membership Access Act, which Congress passed in 1998, hadn’t created a prompt corrective action system and if many credit unions hadn’t had had a net worth ratio of 11%.
“If many credit unions hadn’t been well-capitalized they couldn’t have afforded the assessments that were needed to pay for the corporate credit union rescue,” he said.
Asked to describe the mood during the agency’s deliberations, he said there was an effort by all three board members and the staff to take prompt and prudent action because “we knew that there was the potential for a catastrophe that could hurt the credit union system. And if we had made the wrong decisions there could have been a terrible run on the corporate that would have forced us to have a fire sale of the corporate credit unions’ securities and caused even greater losses.”
Fenner noted that the while credit union executives and lobbyists often complain about the regulatory burden, the NCUA’s regulations don’t contribute as much to that as many people think.
“The NCUA’s rulemaking doesn’t cause that much of a compliance burden. When you look at what we’ve done on subjects such as golden parachutes and interest-rate risk, they don’t require credit unions to change their actions extensively on a day-to-day basis. What they do is establish strong guiding principles for how the credit union should deal with certain issues. And the agency only issues rules when they are necessary to preserve the safety and soundness of the credit union system.”
NCUA Chairman Debbie Matz praised Fenner’s “wise counsel” and said his advice had helped the agency deal with many difficult issues in a fair and evenhanded way. She said Fenner was welcome to visit any time.
NCUA Board Member Gigi Hyland, who also dealt with Fenner while she was a lawyer representing credit unions and as head of the trade association representing corporate credit unions, said Fenner was always easy to work with and offered solid, well-reasoned advice on the matter at hand.
During a tribute to him at a recent NCUA board meeting she also praised Fenner’s taste in clothing and said “he is one of the few men I know who can wear a seersucker suit.”
NCUA Board Member Michael Fryzel quipped that “I echo the comments of my two colleagues, minus the invitation to visit us.”
Fenner said in the interview that he has “no plans to come back to the agency anytime soon, especially for board meetings” but praised the current board members as being knowledgeable and conscientious.
With the departure of Fenner, the agency lost a strong institutional memory. He said the biggest change came in 1979 when the agency switched from being run by a single administrator to having a three-member board.
The shift, which was mandated by Congress, is an improvement he said because it resulted in “decisions that were thought out more carefully.”
Fenner plans to spend the rest of the year traveling and visiting with his family, including seeing his son Wyatt star in a production of The Merchant of Venice in Los Angeles.
He will decide next year what to do next.