President Obama Will Appoint Three NCUA Board Members

by Hon. Daniel A. Mica, The DMA Group

President Obama begins his second-term with a full agenda and credit unions are curious as to when their issues will be discussed. 2013 and beyond will see politics and the National Credit Union Administration (NCUA) come together as terms for all three of the agencies board members will end before President Obama leaves office. One of the top credit union priorities is to see their regulatory organization, NCUA, directed by top-notch, capable and fair-minded board members. There is already speculation as to who the president will nominate for the NCUA board seat vacated by Gigi Hyland, as well as timing of this nomination.

Politically, the nominee to replace board member Hyland will almost assuredly be a Democrat.  It could be an independent, it will not be a Republican. A Republican nominee will likely come next year when Board Member Fryzel’s term expires on August 2, 2013. Finally, the president will have an opportunity to name one additional board member when Chairman Matz’s term expires April 10, 2015.

It is in the best interest of the credit union movement to start thinking about these potential vacancies and be prepared to offer names well in advance of the necessary appointments. Let’s review the process.

First and foremost, the candidate needs to be identified, accepted, and vetted by the administration. This can be a tedious, time consuming process. In particular the background check can be the item that delays the nominations the longest. So how does one get to be selected by the White House? In my mind there are two qualifications. First, the candidate must meet certain standards of knowledge, integrity and ability to be considered. Administrations have learned that inept appointees can be an embarrassment to the president.  Although I believe that knowledge should include a working understanding of the credit union system, past nominees have been appointed without any apparent knowledge or background involving credit unions. Some of these have been excellent, some not.

The political part of the process is finding a nominee who can withstand the rigors of the confirmation process. Most of what we see publicly are the confirmation hearings, but there process is far more broad than that. The press, trade associations, banks and numerous competing interests dig deeply into the nominee’s personal life, background and character. Actually this is one of the reasons why potential nominees names are often leaked in advance of a possible appointment to see if any major “undiscovered concerns” arise before the actual nomination.

The next step is gaining support of individual senators. The most important of whom serve on the banking committee that conducts the confirmation hearing. Assuming the confirmation process goes well, this could take anywhere from a few months to a year or more. In recent administrations it has taken an average of 8.5 months to move a presidential nominee through the confirmation process. This becomes a major disadvantage for some candidates who may have to put their jobs or life on hold for an extended period of time.

From my perspective, I think the ideal candidate is someone in the early stages of their career or someone who has had a successful career and is looking for an additional opportunity to serve. I also think and hope that the next board member will be supportive of a positive environment for credit unions to thrive and grow but as a former elected official I truly believe that that individual should also be a firm and fair regulator, not a rubber stamp for the industry. Every financial services industry that I have had the chance to observe including banks, insurance and even credit unions have often created their own problems by having a regulator in their pocket.

Let the process begin!