Monday, November 21, 2016

Short Shelf Life At NCUA ?

Had an interesting comment question yesterday asking why NCUA might have a "short shelf life"?

Think that would be a great question to think about and might give firm reason for credit unions and the NCUA to "ACT" now and move forward aggressively with some sense of urgency... perhaps as if our industry and professional lives depend on it!

Here are some points to consider, certain you will have others:

1.  We have just elected a Republican President, Senate, and House, who have all committed to a smaller federal government - expect "gridlock" to end in terms of financial regulations and financial regulators.

2.  Secretary of the Treasury, under President George Bush, Hank Paulson in March, 2008 proposed a sweeping reform and consolidation of federal regulation and insurance of the U.S. financial services industry. (His "plans" were interrupted by the small matter of the collapse of our financial system that year.) NCUA was eliminated under the plan - "Blueprint for a Modernized Financial Regulatory Structure" [ here's the link].  Expect many of those same ideas and same people to resurface under the Trump administration. They have been "out of power" for eight years - no more!

3.  Congress will deal with financial services regulation early on, whether you call it Dodd-Frank, CFPB, Too-Big-To-Fail, the Federal Reserve, complexity/compliance... you get the drift.

4. NCUA has not exactly endeared itself to Congress over the last few years including the "infamous" House Financial Services Committee appearance last year by Chair Matz - something we will be a longtime in living down. Hope you know political people have long memories... expect to pay for the mistakes, unless we act decisively first!

5. The accelerating decline in the number of credit unions ( and community banks!) due to consolidation, economies of scale, regulatory burden, and technology. Some think we no longer need a multitude of independent - "answerable to no one" - federal agencies.  Another growing concern is over the "inadequacy" of the state regulatory systems to monitor very large state-chartered institutions. (See 1 & 2 above!)

6. NCUA does not appear - at this time - to have the the talent and skill sets to regulate and insure a credit union industry dominated by fewer and fewer large credit unions. The RBC rule-making fiasco of last year is all the prima facie evidence most folks would need to question depth and competency.

7.  NCUA is deficient in technological expertise - self-evident and self-admitted - and probably does not the have the long-range ability to attract and retain these highly demanded skill sets on a governmental pay scale. Outsourcing is possible, but when you end up outsourcing the key, critical functions of a government agency, it doesn't take long for folks to suggest "Why not outsource the whole thing"! (See regulatory consolidation above).

8) The agency continues to fail to act to clearly distinguish and differentiate NCUA as a "unique", cooperative regulatory system.  The potential is there, that opportunity exists, but there is no urgency, no leadership energy among senior staff, who either don't know what to do or simply lack any creative drive - "to set the bar, a higher standard" at NCUA (for their own survival!)

9)  No "peer pressure" - the FDIC, Fed, SEC, etc are very certain that the NCUA will not be the "surviving" entity under any Congressional regulatory consolidation plan.

10)  And did I mention...

... "things" have changed!

["ACT" - What are "you" waiting for?)

1 comment:

Anonymous said...

Thank you Jim.
Now, if you would, give us the justification for NCUA remaining an independent in, Congress doesn't pull the rug.
And don't bother asking Marcus for help, none of us listen to him.