Three Questions For The Newest Member Of The Board
by. Henry Meier
If the CU Times is correct, then my very quiet campaign to be nominated to serve on the NCUA Board has failed. The Obama Administration is set to nominate Rick Metsger, a former state legislator who the Credit Union Association of Oregon once named its Legislator of the Decade.
The position has two unique roles, as I see it. One is to be an advocate for the industry as a whole. This is the fun part of the job where you get to extol the virtues of the cooperative movement, bemoan excessive regulation and pat board members on the back for their thankless service. A second less exciting but more important part of the job is to establish the framework for the appropriate oversight of the safety and soundness of the industry. So here are the three questions I would want addressed by the NCUA staff if I ever get my nomination through the vetting process.
1) What are the systemic risks facing the industry as a whole? In a recent speech, Federal Reserve Chairman Ben Bernanke talked of a shift in examiner emphasis between monitoring the operational risks of individual banks and recognizing trends that pose a risk to the banking industry as a whole. For example, the mortgage meltdown triggered the financial crisis but it was the inability of examiners to recognize the interconnectedness of banks to the mortgage industry that turned a cyclical decline in housing prices into a threat to the entire economy.
Does NCUA have an idea of what systemic risks, if any, are unique to the credit union industry? The NCUA Board throws around the term systemic risk, but it means more than just paying particularly close attention to larger institutions. It means identifying those vulnerabilities that cause a threat to all credit unions that only regulators are in a position to take action against. Remember, this is an agency that didn’t have an office of chief economist until 2010, so you to excuse me if I am a little cynical.
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