Next Tuesday, March 4, the Senate Banking committee will hold a confirmation hearing for Mark McWatters, President Obama’s Republican nominee for the NCUA Board seat now held by Mike Fryzel. The hearing is an important opportunity for Mr. McWatters to present his thoughts on the NCUA board’s role, and for Senators to learn his views on regulation of financial cooperatives.
NCUA board nomination hearings are normally polite and low-key events. However, it is one of the very few times to explore a candidate’s philosophy independent of specific events and responsibilities. Ideally, such a dialogue could rise above pleasantries and generalities about safety and soundness so that the candidate’s view of the position is better known.
After the Senate confirmation of an NCUA board member occurs, there is virtually no check and balance on how the authority, once conveyed, is then exercised. Current NCUA board appointments attest to the insight of Abraham Lincoln’s observation, “ Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”
Questions for the Hearing
The following are possible questions that would provide McWatters an opportunity to present his approach as a regulator of cooperatives:
1. As a potential board member, what would you say is the most important factor in ensuring member-owner confidence in the credit union system?
2. As a potential board member, what would you say is the most important factor in ensuring credit union volunteers’ and professional leaders’ confidence in the credit union system?
3. Can you relate to us how financial service business models differ based on their charter and approach to the market? How should their regulators differ?
4. What is the difference between insurance and regulatory oversight? How will you as a board member identify the differences and ensure competent execution of those duties in furthering the goals of a cooperative charter?
5. Can you cite the last 3-4 serious challenges to the credit union system and how they were navigated by the agency? What worked and did not? How would you learn about this performance if you do not know now?
6. What do you think is the most important factor in the health of a financial cooperative?
Send Questions for McWatters Hearing Now
A key principle of cooperatives is democratic governance. If members do not exercise their rights, the principle can end up meaningless. An NCUA board member’s confirmation hearing is an opportunity for credit unions to demonstrate their interest in the nominee’s views and their belief in the importance of participation by cooperative owners.
Think about the regulatory topics or experiences with NCUA. Convert these to one or two straight-forward questions. Send them to your league, NAFCU, CUNA and NASCUS—or if they are not responsive, directly to members of the Senate Banking Committee.
For example, if you are concerned about transparency, examiner overreach, a proposed rule (e.g., CUSO, home-based credit unions, risk-based capital), now is the time to ask about these issues. Mr. McWatters may not have an answers right then, but you can be assured he will not forget a question posed by a Senator. Democracy only works if people want to make it work.