Now more than ever, NCUA needs a reset

On Friday, November 20 I resigned as a board member of the National Credit Union Administration. My letter to President Trump stated that I was submitting my resignation as my successor was within a week or so from confirmation by the United States Senate. That’s certainly true, but it does not reflect the entire story.

In the span of less than two years I was twice effectively removed from my position at the NCUA by the Trump administration or its lackeys. First, I was relieved as chairman of the agency on April 8, 2019, for acting as an old-school progressive Republican who views collegiality, collaboration and bipartisanship as virtues. Second, I was forced to resign my board position two months ago for declining to concur with then-Chairman Rodney Hood on an array of policy and regulatory issues, even though my professional analysis of each matter — based upon almost 40 years of legal practice and over 40 years as a CPA — was objectively and transparently presented on the record for all to review and critique. I also, from the perspective of the previous White House administration, committed the unforgiveable indiscretion of concurring with my Democratic colleague on the board in challenging the views of the then-chairman on a number of principled policy and regulatory issues.

Avoidance of these alleged transgressions would have required me to contravene the core values of my constitutional oath of office and act in a manner contrary to my professional judgment as an autonomous board member of a safety-and-soundness and consumer-protection regulatory agency. I couldn’t do that. I viewed my actions as simply doing the right thing for the right reason without any need to run a political gauntlet or subjugate my statutorily mandated independence to that of another board member.

As I wrote here last year, a successful board is anchored in respect and trust with the understanding that reasonable minds may differ. Reciprocated collegiality, collaboration and bipartisanship really do matter. Not only do they create a highly functional board and improve staff morale, they lay the foundation for the development and implementation of the big ideas that help credit unions to grow, thrive and prosper in a safe and sound, prudently regulated manner, all in accordance with the letter and spirit of the Federal Credit Union Act. If a board adopts this governance model, little need will develop to count votes, as all board members and staff will work together in good faith to achieve their shared goals where the best ideas prevail, regardless of who develops them.

In the months following my departure and Kyle Hauptman’s confirmation to the board, the agency has approved several items that I could not have supported. The proposed rules on overdraft protections and mortgage servicing rights raise consumer protection issues, while the 2021-2022 budget falls short in addressing the agency’s mission of safety and soundness, as well as consumer protection. And the failure to approve a simple and elegant credit union leverage ratio rule, based upon the community bank leverage ratio rule authorized in S. 2155, appears myopic while needlessly delaying the board’s statutory duty to enact a sensible, tailored and targeted risk-based net worth rule for complex credit unions.

Regarding the proposed rule on shared facilities, in particular, I am concerned that some have become inappropriately emboldened by the agency’s legal victory against the Independent Community Bankers of America on the member business lending rule in 2017, and last year’s decision by the Supreme Court not to consider the American Bankers Association’s suit contesting revisions to the field of membership rule. The agency prevailed in those cases because we were exceedingly careful to ascertain that the rules complied with the letter and spirit and the Federal Credit Union Act. As chairman, I directed the NCUA staff to draft rules and regulations as if they were presenting a case before a group of Article III judges who knew little about credit unions and the Federal Credit Union Act, while also anticipating the potential responses of those who may wish to challenge the rule. Not surprisingly, this thoughtful and thorough approach prevailed. I am troubled that the agency may have abandoned such a rigorous and introspective analysis and its Congressional mandate to stay clearly within the four corners of the Federal Credit Union Act. This is unfortunate, yet I remain optimistic that the new chairman will correct the misdirection.

With that said, I wish to congratulate Todd Harper on being named NCUA chairman. I respectfully encourage the Biden administration, Congress, the NCUA staff and the credit union community to offer their enthusiastic support. Chairman Harper is enormously knowledgeable about the agency and the credit union community, and he respects and values the service and dedication of the NCUA staff in discharging their critical mission. He also is absolutely committed to serving the unbanked, the underserved, persons of color, and to advancing the discussion surrounding diversity, equity and inclusion that so many in the Trump administration were reluctant to have.

Most significantly, I encourage the NCUA board to operate in the spirit of reciprocated collegiality, collaboration and bipartisanship while serving the safety and soundness and consumer protection mission of the agency.