A New Chairman's Corner

by J. Mark McWatters, Acting Chairman

I am honored that the President has designated me as Acting Chairman of the NCUA Board. My goal is to ensure that the President’s agenda of regulatory relief is fulfilled so that the agency eases the burden on credit unions as they endeavor to serve the middle class and people of modest means.

As Acting Chairman, I plan to focus on three central areas:

  • A full regulatory review with the goal of empowering credit union innovation while lifting unnecessary regulations and streamlining others;
  • A top-to-bottom review of the agency to determine what works, what doesn’t and where we can improve; and
  • A greater control over the agency’s budget and resource allocation process.

I also look forward to continuing the collegial and productive working relationship I have with Board Member Metsger, so as to ensure that the agency’s statutory core functions as the safety and soundness regulator and federal insurer of credit unions are fully and faithfully performed, as Congress intended.

Too often, NCUA has assumed that if the rules we have on the books aren’t working the way they should, we should just add more. As Board Member Metsger and I have demonstrated over the past few months, we are going to approach the regulatory process in a more analytical, more practical and more mindful manner. Smarter regulation and supervision is the right approach. However, where material supervisory problems arise, we will move swiftly and decisively to resolve them in a manner that is well-tailored to the situation.

A number of you have shared with me your concerns that for too long the NCUA’s regulatory and supervisory approach has lacked a real-world perspective and that it is rooted in a bureaucratic maze. Such an approach has detrimental consequences for credit union development and diminishes the agency’s resources that the community is forced to fund.

We will work diligently to develop and implement policies and procedures that are more attuned to credit union concerns, while vigorously promoting safety and soundness. We will also make better use of the expertise within the credit union system and minimize the “echo chamber effect” that drowns out perspectives from outside the agency. We must minimize overzealous, one-sided policies and procedures designed to eliminate risks, as opposed to allowing credit unions to manage them appropriately.

There are at least two Executive Orders that will influence our work at NCUA going forward. First, the President has requested that the Financial Stability Oversight Council report to him in 120 days on laws, rules, guidance and reporting requirements that impede economic growth. NCUA, as a member of FSOC, will work with the other members of the council to complete this report.

The second Executive Order, Reducing Regulation and Controlling Regulatory Costs, is also of significance to the credit union community and the agency. It states that for every new rule adopted, agencies should identify at least two current rules that could be eliminated. I remain committed to bringing true regulatory relief to the extent permitted by applicable law and to protecting the deposits of the more than 106 million Americans who rely on federally insured credit unions for their financial needs, all in a manner that ensures the continued safety and soundness of the National Credit Union Share Insurance Fund.

Our policies and practices will be data driven and our decisions will flow from objective, thorough economic, legal and demographic analyses. We will remain mindful of developments in the financial marketplace and of any new, positive approaches to regulation and supervision gleaned from other regulators—state or federal—that we should consider. We will continue to partner with state supervisory authorities and other regulators in the common goal of safety and soundness.

NCUA is firmly committed to having the expertise needed to fulfill our mission and support our functions. We will communicate our regulatory perspectives to other regulatory agencies when it is important that credit union differences be accommodated in rulemakings or supervisory directives.

In addition, we will continue to provide more transparency on the operating budget and enhanced accountability to our stakeholders on related issues, such as the Overhead Transfer Rate. The operating budget will reflect the Board’s priorities, while providing sufficient, but not excessive, resources for the agency to perform our core responsibilities and respond to unforeseen problems in an efficient and effective manner.

No organization can succeed without striving to enhance the efficiency and effectiveness of its policies, business plans and operations. It is essential for NCUA not just to contain costs, but also to pursue excellence in the way the agency functions as a safety and soundness regulator. Regulatory burden must not stand in the way of credit unions pursuing their goals on behalf of their members.

Together, these initiatives will result in improved operations for credit unions and NCUA. I look forward to continuing to work with the credit union community, so we may achieve a successful cooperative model, without sacrificing safety and soundness and regulatory oversight.

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