NCUA Board Chairman Debbie Matz's departure is nearing while Congress bickers over NCUA BoardMember J. Mark McWatters’ nomination to the Export-Import Bank board. As a result, howthe NCUA board it will operate in a post-Matz era is unknown.

Currently, the Ex-Im Bank is operating under constraints,because it only has two board members. The five-seat board cannotapprove transactions totaling more than $10 million without aquorum.

Should Congress move on McWatters’ nomination to the Ex-Im Bankboard, it would leave the NCUA with a single Democrat running itsboard: Vice Chairman Rick Metsger.

The Politics Involved

Politics played a heavy hand when Senate Banking Committee Chairman RichardShelby (R-Ala.) refused to budge on moving nominations out of his committee. Hehas said he wants to see a nomination for the vice chairman ofsupervision at the Federal Reserve first, leaving McWatters’nomination in limbo.

Senate Majority Leader Mitch McConnell (R-Ky.) has been applyingpressure on Shelby to take up the nomination, but Shelby has defiedthe majority leader.

Shelby's refusal has garnered support. Club for Growth, aconservative political action group, released a statement praisinghis inaction. The group's president, David McIntosh, said, “Byholding up the appointment of a new Ex-Im director, Senator Shelbyis doing taxpayers a favor by blocking the flow of corporatewelfare to massive companies that are still demanding favors fromthe federal government.”

Whether Shelby will move on any of the nominees is stillunknown. A recent Senate Banking Committee vote on SEC nominationswas postponed after Democrats united against the nominees and thecommittee was unable to forward the block.

Neither Shelby nor McConnell's offices returned calls seekingcomment.

“I think [Shelby] has serious concerns about the Export-Importbank,” NAFCU President/CEO Dan Berger said. “It's not a McWattersissue, I think it's a Ex-Im Bank issue.”

Moving Forward

Meanwhile, trade groups areoperating under the assumption that the NCUA board will have twomembers. Berger stressed the board should continue its course andfocus on regulatory relief.

“Regulatory relief has been our top priority for years and thatwill continue to be the case, even after Chairman Matz’ departure,”he said. “But if prior remarks by Vice Chairman Metsger and BoardMember McWatters signaling their support for additional regulatoryrelief measures are any indication, I think we are prettyencouraged that opportunities for true regulatory relief will beconsidered by a two member board.”

However, regulatory relief could slow measurably with atwo-member board, according to remarks McWatters made at the recentNACUSO Network Conference earlier this month in Las Vegas. He saidthe idea of a regulatory moratorium has a little more teeth to itnow that the board is split evenly by party.

McWatters added he would not vote in favor of new regulationswithout evidence of the credit union community being in danger. Hefurther suggested the agency handle potential issues throughsupervision.

His comments mirrored earlier statements he made during CUNA's Governmental AffairsConference in February, when he called for a moratorium on any newrules and a look at current rules to ascertain whether any are outof date.

However, given McWatters’ potential move to the Ex-Im Bank, theclock is running out on issues he supports. For example, he hasbeen a strong advocate of expanding to an 18-month examinationcycle.

Cooperative Credit UnionAssociation President/CEO Paul Gentile has also been a long-timeadvocate of lengthening the exam cycle for low-risk creditunions.

“I think it's a great opportunity for the two-person board tohandle some of the administrative issues that are really pressingat the agency, such as the extended exam cycle that banks areenjoying,” he said. “You certainly don't need a three-person boardto address that.”

Trade groups also support an extended exam cycle. Berger saidNAFCU will continue to press the NCUA on the issue.

Another action item for the remaining board members will involveMcWatters’ push on supplemental capital, which he said islanguishing. At NACUSO, he called for a supplemental capitalproposal around the time of the FOM proposal.

Metsger has led the charge for FOM reform. The agency expects afinal rule on FOM this year, which could be a crowning achievementfor Metsger, whose term expires in August 2017.

“Metsger has been driving that forward,” CUNA's Senior Directorof Advocacy/Counsel Lance Noggle said. “Keeping that champion onthe board is good. We don't want to see a lack of a chairman slow[the FOM proposal] down at all.”

NASCUS President/CEO LucyIto added, “The record for both Metsger and McWatters shows thatthey actually are doers.”

She cited Metsger's push for FOM modernization as an example ofthe type of work of which he is capable.

“People forget that and it's probably one of the mostsignificant things for the credit union system in terms of futuregrowth prospects,” she said. “I think that gives an indication thathe's interested in doing other things.”

Ito said she does not anticipate a stalemate on issues by thetwo.

“That would be a waste of very precious time for the creditunion system,” she said.

Calling the two remaining board members measured, Ito notedMcWatters’ push for transparency and accountability at the NCUA ishis way of pursuing fair and balanced regulation.

“I think they are both careful, so they aren't going to be hastyabout things,” she said. “They strike that balance at beingconstructive and being productive, yet making sure they areinformed, as the common denominator.”

The immediate period following Matz’ departure could be a goodtime for the board to address administrative issues, according toGentile. Among the issues the board should address is the callreport deadline, he said.

“You certainly don't need a board vote to look at giving creditunions relief on the call report date,” he said. “This may be agreat time to get the administrative actions done and get theirhouse in order.”

Berger added, “We hope a two-member board doesn't slow down anyongoing reg relief measures we are working for. I think they willwork together and hopefully find some common ground on providingadditional relief for credit unions.”

If Congress moves forward on McWatters’ nomination, Metsger willbe the solitary board member, something that is not unheard of.Former NCUA Board Chairman Dennis Dollar was the only board memberfor a short period during his tenure at the NCUA.

“Historically, it's not like it hasn't been done before,” Itosaid. “It's Washington, D.C., so anything can happen.”