National Credit Union Administration Chairman Rick Metsger says he is determined to leave his mark on the agency despite the uncertainty surrounding his tenure—and in just a few weeks, he's already taken two game-changing actions.
Metsger, whose term on the board expires Aug. 2, 2017, said in a recent interview with Credit Union Journal his tenure as chairman may be less than a year, and that has lent a sense of urgency to his term. So he wasted little time, weighing in on a pair of contentious issues in his first month on the job.
On May 12, Metsger announced NCUA would review its policy requiring annual examinations for credit unions with more than $250 million of assets, indicating his goal was to eliminate the annual-exam rule within two months.
That raised eyebrows since just two months earlier, Metsger's predecessor as chairman, Debbie Matz, told lawmakers the regulator would hold off on reconsidering its examination cycle until late 2017. Metsger, however, said in a statement the annual-exam rule "creates a logjam of exams at the end of each year, which is neither effective nor efficient."
A week later, Metsger made another significant policy change when he opted to hold briefings involving board members and agency staff in public. Previously such discussions took place behind closed doors.
Metsger convened the first open briefing May 19, following the regular monthly board meeting. Agency staff briefed the two members on examination and call report issues.
"I'm not going to be a caretaker or a seat-warmer," Metsger told Credit Union Journal. "I made that very clear. Given how short my time may be, that is all the more reason to get moving. Let's look at all the policies and procedures and look at how we can be more efficient and effective. The public briefings will help us identify roadblocks early on so we can work through those before pen is even put to paper on a new rule."
"I can't remember the last time NCUA allowed the public to sit on on a session like that," Lucy Ito, President and Chief Executive of the National Association of State Credit Union Supervisors, said in an interview Thursday. Ito added she would like to see officials from outside NCUA invited to provide input at future briefings.
Metsger's activist start may have come as a surprise to some in the industry, given the fact a presidential election is fewer than six months away, and because Matz' departure in April leaves the three-person board with one Democrat and one Republican.
A two-person board means the possibility of one member digging in his heels and bringing business to a halt always lurks in the background and may have reinforced the expectation for a slow start to Metsger's administration.
Dennis Dollar, who chaired the NCUA board from 2001 to 2004, acknowledged the added burden a board vacancy creates, but credited Metsger for a strong opening act.
"Chairman Metsger has hit the ground running with the action on 18-month exam cycles for well-capitalized credit unions, public briefing sessions and a willingness to look at the call report deadlines," Dollar wrote in an email to CU Journal. "I think he has set out to establish that he has his own agenda and is not tied to any previous chairman's agenda. The real question will be how well he can work in a two-member board situation with Board Member [J. Mark] McWatters in that each of them will have an essential veto authority."
Certainly, the working relationship between Metsger and McWatters will play a crucial role as long as board business is handled by just two members.
Frequently on the losing end of 2-1 votes during Matz' term, McWatters said he appreciated the agency's new tone under Metsger.
"I very much look forward to working with you," McWatters said. "I'm glad the president did the right thing. Let's get to work and make some progress."
Metsger was viewed as a reliable ally of Matz, but regardless of past policy differences, Dollar said there was no reason he and McWatters could not work together to address an agenda that includes planned reforms to field of membership regulations and supplemental capital.
"I believe they are both professional and reasonable men who can accomplish a great deal, even with the supposed handicap of no third board member," he wrote. "The early returns are quite positive from both Chairman Metsger's and Board Member McWatters' positions. They both know they need the other's support in order to have a meaningful and lasting impact, and I believe they both truly want to leave a positive legacy on credit unions and NCUA."
Ryan Donavan, chief advocacy officer at the Credit Union National Association, said in an interview Thursday that the events of the past month show both Metsger and McWatters seem determined to leave any disagreements in the past.
"What I'm sensing in the first month is an attempt at cooperation as opposed to conflict," Donovan said. "We'll probably be operating with a two-person board well into 2017. Our hope is that the remainder of that time looks a lot like the first 26 days."
NAFCU also applauded Metsger's move toward transparency and cooperation. "I attended the first public briefing, and I thought it was very helpful," said Carrie Hunt, executive vice president of government affairs and general counsel. "It gave stakeholders a view at what the agency is working on. At a minimum, more public discussion is better."
Though Hunt noted she couldn't speak to the internal workings of the agency, the new approach to briefings should help move things forward that may otherwise have been stunted by the lack of a third board member. "I don't know that [Metsger's decision to do public briefings] was directly related to [the need to get McWatters' vote in order to move anything through], but certainly there will need to be more collaboration between the two board members because there will need to be agreement for things to move forward."
Keith Leggett, a retired American Bankers Association senior economist and a frequent blogger on bank-credit union issues, characterized the implementation of longer examination cycles as a common-sense move, since NCUA is no longer faced with the heightened number of problem institutions it dealt with during the Financial Crisis.
"Debbie Matz insisted on annual exams because there was a huge increase in problem credit unions," Leggett said in an interview Thursday. "Now the pendulum is swinging the other way."
Leggett also called the new open briefing format "somewhat positive" but added NCUA still has a number of transparency issues. "I think the agency is schizophrenic," he said. "In some cases you look and are just amazed they won't reveal certain information."
Leggett's ire was triggered recently, when NCUA denied a Freedom of Information Act request he filed to learn the total net recoveries from the agency's corporate CU lawsuits. NCUA has made public gross recoveries totaling $3.1 billion, but it hasn't noted how much of that will go to the law firms it hired to represent it. NCUA said it does not discuss relationships with outside counsel.
CUNA's Donovan said he has noticed an increase in transparency since Metsger took the reins. In addition to implementing open briefings, he said Metsger was quick to reach out and arrange a meeting with CUNA President and Chief Executive Jim Nussle.
Metsger has also asked to consult with NASCUS, Ito noted. These clear signals of collaboration, Donovan suggested, "gets us off on a very good foot."
