McWatters Calls for NCUA Advisory Committees

First GAC Speech Emphasizes “True” Reg Relief, Transparency and Engagement

WASHINGTON, DC (March 10, 2015 ) — In his first formal address before the Credit Union National Association, National Credit Union Administration Board Member J. Mark McWatters stressed the need for transparent and fully accountable regulation, calling on the NCUA Board to establish three formal advisory committees.

McWatters delivered his remarks as the opening speaker at CUNA’s annual Governmental Affairs Conference here today. The text of Board Member McWatters’ prepared remarks is available here.

McWatters called on the NCUA Board to “establish not less than three formal advisory committees” with the mandate to advise the NCUA Board about:

  • NCUA’s budget and budgetary process,
  • NCUA’s examination programs and appeals process, and
  • Areas where NCUA may expedite regulatory relief for the credit union community without compromising the safety and soundness of the Share Insurance Fund.

Additionally, McWatters challenged NCUA to have the “confidence, courage and conviction to chart a regulatory path for the credit union community that is based upon a transparent and fully accountable appreciation of the unique structure and attributes of the cooperative, not-for-profit business model.”

McWatters also expressed his views on “true regulatory relief” and the Share Insurance Fund and called on NCUA to “strive for thorough and thoughtful engagement.”

“True regulatory relief and protecting the safety and soundness of the Share Insurance Fund, in my view, are not mutually exclusive goals,” McWatters said.

McWatters further commented on his January dissent on the re-proposal of the risk-based capital rule, questioning the legality of the rule’s creation of a two-tier system.

Asserting a need for an “objective and forward-looking balance between the free marketplace and protecting the Share Insurance Fund,” McWatters expressed concern that a “disequilibrium seems to be in place” when measuring regulation against the actual risk presented by the credit union community to the Share Insurance Fund.

In discussing the importance of regulatory relief for credit unions, McWatters encouraged NCUA to undertake true regulatory relief, including incorporating supplemental (secondary) capital into the final risk-based capital rule and modernizing the antiquated member business lending regulations that place unnecessary limits on the ability of credit unions to extend job-creating small business loans to Main Street enterprises. He also said NCUA needs to conduct a “top-to-bottom review” of its field of membership regulations that needlessly restrict the ability of credit unions to serve consumers.

McWatters highlighted the transformative power of free-market economics, job-creating Main Street small business operations and the financial services needs of the middle class and the underserved. Praising credit unions for their service to their members, McWatters noted that “in a financial services world dominated by interconnected, systemically important, too-big-to-fail financial institutions, it is truly refreshing and remarkable that the locally owned and managed, cooperative, not-for-profit business model exists and thrives today.”

McWatters concluded his remarks by encouraging NCUA and the credit union community to work together in and new direction through a “collaborative and collegial process with the goal of building trust and inclusiveness.”

“Matters of regulatory relief, the economic power of the marketplace and support for Middle American consumers, small business persons and the economically disenfranchised have always been embedded as an integral part of my DNA and will continue to serve as the foundation of all actions I take as a member of the NCUA Board,” McWatters said.

“The continuing success of the credit union system is directly attributable to the tireless, diligent efforts of you and your colleagues,” McWatters said. “I pledge that I will endeavor to formulate a regulatory protocol that respects these contributions and accomplishments while maintaining the sustainability and viability of the credit union financial services model and securing the safety and soundness of the Share Insurance Fund.”

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 99 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.

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