Massachusetts, New Hampshire and Rhode Island Credit Unions host NCUA Board Member J. Mark McWatters

NEWTON, MA (December 16, 2014) — In a dynamic two-hour open-forum session held last Friday in Newton, Massachusetts, NCUA Board Member J. Mark McWatters made it very clear that transparency and practical efficient regulation will be his high priorities at the Agency.

Fielding questions from an audience of more than 75 credit union leaders, McWatters demonstrated his background as a professor of Law, taking the opportunity to engage the audience and draw their opinions out on various matters, all the while listening intently and taking notes as they spoke.

In his introduction of McWatters, Paul Gentile, president/CEO of the Massachusetts Credit Union League, New Hampshire Credit Union League and Credit Union Association of Rhode Island said credit unions have already benefited from the board member’s commitment to transparency.

“Mr. McWatters is bringing a breath of fresh air to NCUA, given his desire for openness and transparency,” Gentile noted. “Mr. McWatters understands the important role credit unions play in the lives of consumers and is very open to working with them so they can better serve their members.”

McWatters began his remarks acknowledging that much of the information withheld in the past is not sensitive. “These are not the launch codes,” McWatters wryly stated, citing the Overhead Transfer Rate as an example. He indicated that regulators need to be able to tell the “story” behind regulations and budgets and that to be believable those stories must be backed up with available facts.

McWatters’ discussion also honed in on the examination process. He noted that some four-fifths of the NCUA budget can be attributed to the cost of personnel and travel, indicating that this alone is a reason that the budget should be subject to a public comment period.

Tension between credit union management and examiners was also discussed. The board member cited his experience as an attorney when he saw clients back away from fighting an examiner finding because they felt that there would be repercussions if they did.

On the topic of member business lending, McWatters stated that the rules are going to be rewritten. He indicated that credit unions clearly have an important role to play in community-oriented small business lending. He stated that there is no good reason for NCUA to create road blocks for credit unions that want to do small business lending; noting credit unions are far more committed to providing this service to the community than the big money center banks.

McWatters also noted that in general, regulators are risk averse by nature and they oversee people who must take on risk in order to do business. He asked that the credit unions and the League catalogue specific examples of regulatory overreach in business lending so that he can use these to make the case when he pushes for regulatory relief.He said, “Regulatory relief is in the eye of the beholder and the credit union is the beholder.”

Before concluding the session, McWatters addressed Risk-Based Capital and its relationship to supplemental capital. He said that in his opinion the second comment period was a “no brainer” and had to be adopted as a sign of respect to those who sent in the more than 2,000 comment letters on the previous version of the regulation.

He said that he will be particularly interested in the comments that the credit union community makes when the second version of the rule is released. He indicated that he will be carefully examining the legal basis for the rule and any supplemental capital provisions it contains.

The gathering concluded with lunch where many in the audience had the opportunity to personally greet McWatters and thank him for lending his ear to their thoughts and concerns.

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