McWatters Disputes Regulatory Capture Claims
Expressing support for the Senate bill that would require budget hearings, NCUA Board Member Mark McWatters said the NCUA should lead on the issue regardless of how other agencies handle the budget process.
In a letter sent to the Senate Banking Committee on Friday, Larry Fazio, NCUA director of examination and insurance, noted that no other financial regulator is subject to a requirement to hold annual budget hearings. Fazio was responding to a series of questions from Senate Banking Committee Chairman Richard Shelby (R-Ala.) following his testimony at a hearing on Feb. 10.
McWatters argued that budget hearings would not compromise the independence of the NCUA.
“All decisions regarding the NCUA budget are made by the NCUA Board. Receiving input from the credit union community - the people who finance NCUA's budget - will in no manner whatsoever threaten the independence of the agency or the safety and soundness of the Share Insurance Fund. The mere suggestion of regulatory capture arising from a budget hearing constitutes a disingenuous, red herring,” McWatters said.
The bill, introduced by Senate Banking Committee members Dean Heller (R-Nev.) and Mark Warner (D-Va.), would also make the draft of a detailed business-type budget publicly available before the full board vote.
According to NCUA Public Affairs Specialist John Fairbanks, “Chairman Matz strongly opposes the bill, as it would undermine the independence of the agency and lead to regulatory capture.”
McWatters said if a credit union leader speaks to an NCUA board member about the NCUA's budget in the board members’ office or over a meal, no one would classify that interaction as regulatory capture.
“But, somehow, if that same credit union member speaks to the NCUA board in a public hearing, on the record, before the cameras and microphones, that communication constitutes regulatory capture? Such analysis defies logic and common sense,” he said.