Your Move, Mr. McWatters
The ink on incoming NCUA Board Member Mark McWatters’ White House orders is barely dry, and he’s already involved in a power struggle.
NCUA Chairman Debbie Matz’ decision to add a board vote to the September agenda affirming her appointment of Rick Metsger to vice chairman was a wise choice, but it creates a dilemma for McWatters.
Should he play nice and support it? Incoming board members generally don’t rock the boat until they test the waters, and rightly so. Just imagine looking up a learning curve that steep, especially for an outlier.
But the vote has significant partisan undertones.
Vice Chairman Metsger won’t vote in a bloc with Matz because of the appointment. It’s more complex than that.
For one thing, it’s a sign the two agree on politics and regulation more often than not, as members of the same political party tend to do. That’s not unusual, but it doesn’t always happen with a three-person board. The Federal Credit Union Act limits a single party to two seats, so there’s really only one person a chairman could select. Credit unions tend to attract people who put members before politics, which can produce board members who agree on national politics, but view regulation through different lenses.
The designation is also probably a reward for Metsger, who may have objected to parts of a proposed or final rule and considered a no vote, but ultimately voted yes in support of Matz’ leadership. In Washington and in life, loyalty brings reward.
The vice chairman title carries a certain weight in Washington that will open doors for initiatives Metsger may want to advance during his term.
The NCUA is small enough potatoes in Washington that most don’t know it’s only a three-person board. But hey, why not pass out that fancier business card if it will benefit credit unions? Metsger is a charismatic guy; he could do the industry good.
Still, the potential for Metsger’s continued support of Matz’ agenda is what makes this appointment controversial. Credit unions are fuming about the risk-based capital proposal, and the trades are especially angry. Really angry. Questioning the NCUA’s legal authority to implement the rule and considering-a-lawsuit angry.
It’s been a long time since an issue has united so many enemies. As vice chairman, Metsger doesn’t have to support the chairman, but he should. That could mean risk-based capital is already a done deal, and all that’s left is finding out new risk weights for five asset categories.
Then there’s the legal issue. The FCUA doesn’t mention a vice chairman office at all. NCUA regulations say the board determines who serves as vice chairman. The legal question is whether the FCUA, which carries more weight than NCUA regs, allows Matz flexibility in the vice chairman process because it does not address it, or whether the FCUA’s silence means NCUA regulations must be followed?
Second, what do the NCUA regulations require? The regs don’t specify the board must determine the vice chairman through a vote, but historically it has.
Finally, the September meeting vote will be to confirm Matz’ appointment of a vice chairman, not select the vice chairman. It’s a small but significant legal difference that could be challenged.
McWatters has powerful Washington connections on both sides of the aisle. Don’t let the quaint college professor title fool you. He’s a lawyer who has been a partner for some impressive Washington law firms and is no shrinking violet.
In fact, he’s so pedigreed he’s spawned conspiracy theories as to why he was nominated in the first place.
I’m sure he plays nice, at least professionally, but he doesn’t have to be content to cast a ceremonial dissenting no vote. He can make things happen on Capitol Hill. He has friends at Treasury.
Don’t mess with Texas, y’all.
Which brings us back to the vice chairman vote. I’m guessing McWatters will ultimately vote in favor of the appointment, choosing to pick his battles and save dissention for more important issues. Like risk-based capital, which Matz wants to finalize this year.
The 2015 budget could also be an issue. Metsger told CU Times the agency will ask for some new positions next year, and as a Republican, McWatters may play the budget hawk role.
The rest of this year is shaping up to be pretty interesting.