(Feb. 12, 2021) A final rule on what records can be used to support the insured status of a joint ownership share account is slated for action during an open meeting to be held virtually Thursday (Feb. 18) by the NCUA Board.

Also on the agenda for the meeting, which gets underway at 10 a.m. ET (and which will be live streamed via the Internet): a quarterly report on the National Credit Union Share Insurance Fund (NCUSIF) and a briefing for the board on the Consolidated Appropriations Act, 2021, and the Emergency Capital Investment Program (ECIP) created under that statute.

The proposal on joint ownership share accounts, issued by the board last May, would allow account records information other than a signature card support the insured status of a joint ownership share account in a credit union. The aim of the proposal – which mirrors a rule adopted in 2019 by the FDIC Board – is aimed at facilitating prompt payment of share insurance in the event of a federally insured credit union’s failure “by explicitly providing alternative methods that the NCUA could use to determine the owners of joint accounts, consistent with the NCUA’s statutory authority,” the proposed rule summary stated.

NASCUS, in its comment supporting the proposal, wrote that providing federally insured credit unions flexibility in satisfying the signature card requirement with information in joint account records acknowledges that account opening practices have evolved substantially over the last nearly 50 years. NASCUS agreed with the proposal’s overall approach – and offered a modest change: replacing the phrase “such as” with “including, but not limited to.” Doing so, NASCUS wrote, would allow NCUA to “make clear on the face of the regulation that other evidence in the account records may be sufficient to establish qualifying joint ownership of a share account.”

The insurance fund report slated for next week is expected to show the fund’s equity ratio as of Dec. 31, 2020. Last September, the agency reported a 13-basis-points (bp) decline in the ratio to 1.22% during the six months ending June 30. That ratio was 16 bp lower than the fund’s “normal operating level” (target level) of 1.38% and within 2 bp of the level (1.2%) below which the agency would be required to deploy a restoration plan.

The drop in the ratio in the first half of last year was attributed to rapid share growth amid the COVID-19 pandemic. Agency staff said during the September open board meeting that the fund equity ratio was expected to rise to 1.32% by year-end 2020, following credit unions’ adjustments in their 1% NCUSIF capitalization deposit.

LINK:
NCUA Board Feb. 18 open meeting agenda

(Jan. 29, 2021) On behalf of the state system, NASCUS President and CEO Lucy Ito congratulated new Chairman Harper, noting his experience with credit unions.

“State regulators and credit unions recognize the breadth and depth of his knowledge of the consumer financial services market and his dedication to a robust dual chartering framework that ultimately benefits members of both state and federal credit unions,” Ito said in a press statement. “Working together, we hope to achieve our shared objectives of a safe, sound and strong credit union system that can innovate and grow in the interests of our members.”

The NASCUS leader also extended thanks to former Chairman Hood for working with the state system over the past two years. “We are especially grateful for his support of the 2019 Document of Cooperation between NCUA and NASCUS which provides a durable roadmap for federal-state partnership,” she said.

Finally, Ito said the state system looks forward to working with Vice Chairman Hauptman, who also serves as the NCUA Board liaison to NASCUS, “particularly as both NASCUS and the agency foster collaboration and alignment between state and federal regulators and the whole NCUA Board.”

(Jan. 29, 2021) Todd M. Harper is now the NCUA Board chairman, succeeding Rodney Hood in the position, as the result of designation by President Joe Biden early this week. Harper is the 12^th person to be chairman of the federal credit union regulator board.

“The credit union system now sits at the intersection of several crossroads, and the agency faces many decisions ahead related to the economic fallout of the COVID-19 pandemic and the need to advance economic equality and justice,” Harper said in a statement issued the day his designation was announced. “As NCUA Board Chairman, I will continue to focus on four policy priorities: capital and liquidity, consumer financial protection, cybersecurity, and diversity, equity and economic inclusion. Each of these priorities are vital in responding to current economic and marketplace realities.”

Prior to joining the NCUA Board, Harper served as director of the agency’s Office of Public and Congressional Affairs and chief policy advisor to former Chairmen Debbie Matz and Rick Metsger. He is the first member of the NCUA staff to become an NCUA Board member and chairman. Before joining the agency, he worked for the U.S. House of Representatives as staff director for the subcommittee on capital markets, insurance, and government-sponsored enterprises and as legislative director and senior legislative assistant to former Rep. Paul Kanjorski (D-Pa.).

Harper was confirmed by the Senate as a member of the NCUA Board in April 2019. His term expires in just about two months (in April), but he can continue to serve in a holdover capacity until a successor is confirmed.

But Harper is the lone Democrat on the board, serving alongside Republican appointees Hood and Vice Chairman Kyle Hauptman. Because he is the only Democrat, it’s likely that the White House will keep him in the seat until at least another position opens on the board. That may be a while, however: the term of Hood (who remains on the board as a member) ends in August 2023, and Hauptman’s in August 2025.

Hood and Hauptman also released a statement this week congratulating Harper, with Hauptman saying he looked forward to working with the new chairman “to provide a regulatory framework that helps credit unions meet the evolving needs of members,” and Hood saying he would work in partnership with both board colleagues to address the impact of COVID-19 on credit unions, and other things, “in a bipartisan manner.”

(Jan. 15, 2021) Adding an “S” for “market sensitivity” to the examination rating system for NCUA was proposed unanimously by the agency Board Thursday, an addition long supported by NASCUS for the federal regulator – especially since 24 states have already incorporated the component into their own exams.

The proposal would also redefine the “L” (Liquidity Risk) component in the existing rating system – and change the name to “CAMELS” (from the existing “CAMEL”).

Nearly five years ago, NASCUS wrote to NCUA urging the change and adding the “S” component. “NASCUS and state supervisory agencies encourage NCUA to consider earlier adoption of ‘CAMELS,’” NASCUS’ Lucy Ito wrote in the June 2016 letter to the board. “We again note that the separation of the ‘S’ component does not require a credit union to develop additional management system enhancements where market risk is already appropriately identified, measured, monitored and managed as part of the ‘L’ component.”

She also noted that in states that have adopted CAMELS (now totaling 24 – up from 16 when she wrote the letter), that regulators and credit unions have reported positive outcomes with nearly no additional regulatory burden. She stated that, in practice, state supervisors have continued to use the same examination procedures for assessing liquidity and interest rate risks. However, she wrote, by rating the “L” and “S” components separately—rather than in a combined component—state regulators have been able to provide better information to credit unions to clearly delineate analysis between liquidity risk and interest-rate risks.

Both Board Chairman Rodney Hood and Member Todd Harper mentioned NASCUS’ position on the S component, or the June 2016 letter, in their remarks – and stressed the importance of reaching out to the state system to discuss the proposal.

NCUA said that the proposal issued Thursday (for a 60-day comment period) would likely take effect in the first quarter of 2022 if adopted.

The agency asserted the proposal would provide greater clarity and transparency regarding credit unions’ sensitivity to market risk and liquidity risk exposures once adopted. “The proposed addition would make the NCUA’s rating system more consistent with the other financial institution regulators’ ratings system both at the federal and state levels,” the agency said.

The agency indicated that separating the “S” and “L” component ratings will allow NCUA to enhance:

• Monitoring of sensitivity to market risk and liquidity risk in the credit union system;
• Communication of specific concerns to individual credit unions; and
• Allocation of resources.

“In general, the NCUA Board expects that adopting a sixth CAMELS rating component will not have any adverse effect on a credit union’s CAMEL composite rating,” the agency wrote in its proposal. “The proposed separation of sensitivity to market risk and liquidity risk into individual CAMELS rating components will reduce potential rating inconsistencies.”

LINK:
Notice of Proposed Rulemaking, Parts 700, 701, 703, 704 and 713, CAMELS Rating System

(Jan. 15, 2021) In other action at its Thursday meeting, the NCUA Board:

• Adopted a final rule clarifying that corporate credit unions may purchase subordinated debt instruments issued by natural person credit unions (allowed under a final rule issued by NCUA late last year). The final rule also specifies the capital treatment of these instruments for corporate credit unions that purchase them. NASCUS and the state system strongly supported the subordinated debt rule, which allows well-capitalized, federally insured credit unions to count subordinated debt as capital for risk-based net worth purposes. The agency said it delayed finalizing the corporate rule, proposed in February 2020, until the subordinated debt rule itself was approved last month.
• Released (for a 30-day comment period, on a 2-1 vote with Harper dissenting) a proposed rule that would add to the agency’s list of permissible CUSO services the origination of any type of loan that a federal credit union (FCU) may originate. This expands the list of permissible loans by CUSOs from only business loans, consumer mortgage loans, student loans, and credit cards to any type of loan an FCU may originate, including, for example, automobile and small-dollar (payday) loans – the two types NCUA said would likely draw the newest involvement by CUSOs.
• Issued (for a 30-day comment period, on a 2-1 vote again with Harper voting no) a proposal raising the threshold for a credit union to be considered “complex” under risk-based capital rules from $50 million to $500 million and a risk-based net worth requirement that exceeds 6%. The change, if adopted, would be effective until the current risk-based capital (RBC) rule goes into effect, currently set for Jan. 1, 2022. “The COVID-19 pandemic has created a vital need for financial institutions, including credit unions, to provide access to responsible credit and other member services to support consumers,” which the agency inferred would be facilitated by the proposal.
• Heard a report on its 2021 Annual Performance Plan, which essentially outlines the general direction of the agency for the coming year through its strategic goals of: Ensuring a safe and sound credit union system; providing a regulatory framework that is transparent, efficient and improves consumer access; and “maximizing organizational performance to enable mission success.”

LINKS:
Final Rule, Part 704, Corporate Credit Unions

Proposed Rule, Part 702, Risk-Based Net Worth, Complex Threshold

Proposed Rule, Part 712, Credit Union Service Organizations

NCUA’s 2021 Annual Performance Plan

(Jan. 15, 2021) NASCUS President and CEO Lucy Ito urged careful review of the proposal by the entire credit union system – and noted that federal law requires the agency to consult with the state system. “The FCU Act requires NCUA to consult and cooperate with state supervisors on prompt corrective action and capital adequacy issues, and we expect the agency to meet its lawful obligation,” she said. “Both approaches outlined by NCUA represent significant changes to how federally insured credit unions will meet capitalization requirements. The approaches include trade-offs that credit unions must weigh thoroughly, but also offer the potential for significant flexibility. NASCUS urges all of its members, both regulators and credit unions, to study this proposal carefully and offer input to us as we prepare our own feedback to the agency on the proposal.”

(Jan. 15, 2021) Two approaches for simplifying risk-based capital (RBC) requirements for federally insured credit unions (FICUs) were proposed by the NCUA Board Thursday, one replacing the current rule with a risk-based leverage ratio (RBLR) rule requirement, and the second retaining the RBC rule but allowing credit unions to “opt-in” to the RBLR.

The proposal (an advance notice of proposed rulemaking (ANPR)) was issued for a 60-day comment period on a 2-1 vote, with Board Member Todd Harper objecting.

The final vote on the proposal came after a more than one-hour delay in which the sound (and written transcript) from the Internet-streamed, virtual meeting was unavailable. That meant, for the most part, discussion among the board members about the proposal was not public. The sound (and transcript) was audible (and visible) again just in time for the recorded vote of 2-1.

In issuing the ANPR, NCUA noted that the existing RBC rule, which was adopted more than five years ago, has been delayed to the first of next year. That delay time, the agency said, has provided it with more time to evaluate FICUs that are classified as “complex” (those with total assets greater than $500 million, a new threshold also set at the meeting Thursday).

NCUA said the RBLR contained in the proposal is intended to simplify the regulatory risk-based capital requirements, while ensuring the overall capital framework. “The RBLR approach would utilize certain risk characteristics to determine the required capital level,” the agency said. This approach differs from the 2015 final rule, the agency said, where all assets and certain off- balance sheet activities were categorized into risk groups and then risk-weighted to produce a risk- based ratio.

The first approach the board is considering, according to the agency, would replace the current risk-based capital rule with the RBLR requirement. The agency said that approach uses relevant risk attribute thresholds to determine which complex credit unions would be required to hold additional capital (or buffers).

The second approach would keep the 2015 RBC rule, but would allow eligible complex FICUs to opt-in to a “complex credit union leverage ratio” (CCULR) framework to meet all regulatory capital requirements. That approach would be modeled on the “Community Bank Leverage Ratio” (CBLR) framework, which is available to certain banks under certain conditions, and went into effect early last year (after adoption in 2019). NCUA Board Chairman Rodney Hood has, in the past, signaled his interest in the agency adopting a similar approach for credit unions. Under the CBLR, a community banking organization may qualify if it has a tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities.

The board also indicated that only one or the other of the approaches would be adopted, calling them mutually exclusive and that the CCULR would not be available under the RBLR.

NCUA also said it is considering the net worth ratio as the RBLR measurement. It would be supplemented, the agency said, with mandatory capital buffers when certain risk factors are triggered. That approach, NCUA said, would require an extra cushion of capital buffers over and above the 7% net worth ratio standard for classification as well capitalized “when certain characteristics inherent in a FICU’s balance sheet exceed specified thresholds.”

The risk factors under consideration, according to NCUA, would be based on the 2015 final rule, which it said used higher risk weightings.

LINK:
Advance Notice of Proposed Rulemaking, Part 702, Simplification of Risk Based Capital Requirements

(Jan. 8, 2021) Nine items – including a proposal on risk-based net worth (complex threshold), an advance notice of proposed rulemaking on simplification of risk based capital requirements and four other final or proposed rules – are all on the NCUA Board’s agenda for Thursday’s open meeting, which gets underway at 10 a.m. ET.

The other action items on the board’s open meeting agenda include: a proposed rule (part 712), on credit union service organizations (CUSOs); a final rule (and a board briefing) on statutory adjustment of civil money penalties (CMPs, part 747); a final rule (part 704), corporate credit unions; and a notice of proposed rulemaking (parts 700, 701, 703, 704 and 713), CAMELS rating system.

The meeting could also possibly be the last chaired by Rodney Hood, a Republican appointee. President-elect Joe Biden, once he is inaugurated Jan. 20, is expected to name Todd Harper, a Democrat appointee, chairman shortly after taking office.

Rulemaking for risk-based net worth and capital requirements has been on the board’s action item list since at least 2014. That year, the board first issued its risk-based capital proposal for “complex” credit unions – then defined as those with more than $100 million in assets – with implementation slated 18 months after the rule would have been finalized. A revised proposed rule was issued in 2015 and finalized that October with an effective date of Jan. 1, 2019.

That final rule was intended to replace the then- (and still now) effective risk-based net worth ratio with a new risk-based capital ratio for federally insured credit unions, which NCUA called comparable to the regulatory risk-based capital measures used by the federal banking agencies: the Federal Deposit Insurance Corp. (FDIC), Federal Reserve, and Office of the Comptroller of Currency (OCC).

But in 2018, the board revised its definition of “complex” credit unions to include only those with more than $500 million in assets. It also delayed the rule’s implementation further, to Jan. 1, 2020.

In December 2019, the board delayed the implementation date again, to 2022 (and on a split vote, with Board Member Todd Harper voting no). At that 2019 meeting, NCUA Board Chairman Rodney Hood said delaying the effective date to 2022 woiuld give the agency time to consider new methods for strengthening credit union capital requirements, indicating that then was a good time to do so as credit unions enjoy strong capital positions.

Also at that meeting, then-NCUA Board Member J. Mark McWatters said the agency was considering “a suite of capital rules,” which would include a proposal for credit unions similar to the community bank leverage ratio (CBLR), adopted by the federal banking agencies in 2019. That rule, he indicated, would exempt credit unions with less than $10 billion in assets from complying with the risk-based capital requirements, if those credit unions meet certain requirements.

Other items on the NCUA Board’s Jan. 14 open meeting agenda include:

• Consideration of the agency’s 2021 annual performance plan;
• Board briefing on the agency’s “Advancing Communities through Credit, Education, Stability and Support” (ACCESS) initiative;
• Board briefing on December’s Consolidated Appropriations Act, 2021 (the COVID-19 relief bill).

Following the board’s public meeting will be its closed (non-public) meeting, featuring six items – which include two supervisory actions, two personnel actions, a delegation of authority and a board briefing.

LINK:
NCUA Board meeting agenda, Jan. 14

(Dec. 18, 2020) Kyle Hauptman, sworn in as the latest (and 24^th) member of the NCUA Board this week prior to participation in the Thursday and today’s board meetings, said he has three priorities as a board member: managing the fallout from the current pandemic and economic downturn, expanding the role of technology, and aligning incentives.

“Credit unions were chartered to serve those of modest means. I plan to work with credit unions, my fellow board members, and Congress on solutions for those facing financial stress,” said Hauptman in a release from NCUA. Echoing comments he made to the Senate Banking Committee last summer during his confirmation hearing, Hauptman added that he wants to “expand technology’s role in reaching the underserved because innovation can provide more inclusive financial services.

The newest board member also said that the practice of less-frequent exam cycles for credit unions with the highest marks “will incent them to maintain that benefit and allow the NCUA to focus more of its attention on problematic credit unions.”

Hauptman, nominated June 18 to the NCUA Board by President Donald Trump, has most recently served as a staff director for the Senate Banking Committee Economic Policy subcommittee and as an economic policy advisor to Sen. Tom Cotton (R-Ark.). He worked on the 2016 Trump presidential transition team and served as a policy advisor on financial services for 2012 Republican presidential nominee Mitt Romney (now a U.S. senator representing Utah).

According to NCUA’s release Monday, Hauptman holds a master’s in business administration from Columbia Business School and a bachelor of arts from University of California, Los Angeles

LINK:
Hauptman Sworn in as NCUA Board Member

(Dec. 11, 2020) As the month winds down, as well as the year, the NCUA Board apparently has decided to make the most of it — by scheduling not one but two meetings in the same week, one right after another on Thursday and Friday, including consideration of a final rule on subordinated debt.

Typically, the agency board meets once per month, and typically on the third Thursday of each month; two meetings in a month are rare. There will also (likely) be a new face at the meetings: Kyle S. Hauptman, confirmed by the Senate last week to a seat on the NCUA Board, will be available to join (after he is sworn into office).

The first meeting, on Thursday (getting underway at 10 a.m. ET and to be live streamed via the Internet), has six items on the agenda: five proposed and final rules, including a final rule on subordinated debt, and a board briefing on the 2021 normal operating level for the National Credit Union Share Insurance Fund (NCUSIF).

In January, the board unanimously issued a 275-plus page proposal to give some federally insured credit unions the ability to issue subordinated debt to help them meet their risk-based capital requirements. The proposal, issued for a 120-day comment period, would allow well-capitalized credit unions to count subordinated debt as capital for risk-based net worth purposes (the fundamental capital pool for mitigating credit union risk in their lending and investment portfolios).

Key provisions of the proposal included:

• Permission for low-income-designated credit unions (LICUs), complex credit unions, and new credit unions to issue subordinated debt for purposes of regulatory capital treatment.
• A maximum maturity of 20 years to be imposed on debt issued (with a minimum maturity of 5 years), and a minimum denomination of $100,000. The agency noted the maturity limit helps to clarify that the financial instruments issued are debt – and not equity in the credit unions (which are solely owned by the members; credit unions do not issue stock).
• Prohibitions on a credit union from being both an issuer and investor unless the credit union meets certain conditions related to mergers.
• Addition of a new section addressing new rules and limits for making loans to other credit unions, including investing in subordinated debt at those credit unions.

NCUA has said that federally insured, state-chartered credit unions (FISCUs) would be eligible for applying to issue subordinated debt if their state laws and rules allow it.

NASCUS has long said that subordinated debt should be a part of the risk-based capital framework because it encourages well-managed credit unions to attract additional loss-absorbing forms of capital that they would otherwise forego. Association leader Lucy Ito has noted that the risk-based capital rulemaking itself is intended to increase the capital buffer standing of a credit union before the share insurance fund, and that subordinated debt is consistent with that goal.

In July, NASCUS filed a comment letter in support of the proposal, writing that the development of the rule is an essential complement to the implementation of a risk-based capital rule. “Including Subordinated Debt in risk-based capital ratio calculations is consistent with the statutory purposes of both state and federal credit unions and is sound public policy,” NASCUS wrote. “This rule will help credit unions and their members, protect the share insurance fund, and help place natural person credit unions in the United States on par with credit unions and other depository institutions worldwide.”

Also on the Thursday episode of the two-day schedule of meetings are consideration of:

• A temporary final rule on regulatory relief in response to COVID-19 (Part 701)
• A proposed rule on field of membership shared facility requirements (Part 701, Appendix B, of NCUA rules);
• A proposed rule on mortgage servicing rights (Parts 703 and 721);
• A proposed rule on overdraft policy (Part 701).

The board will also hear a briefing on the 2021 “normal operating level” (NOL) for the NCUSIF, which is the level of reserves to insured savings that the fund is required to operate under (within a range set by law) each year.

LINK:
NCUA Board agenda, Dec. 17 meeting

(Dec. 11, 2020) Final approval of the 2021 NCUA budget, which includes a concerning increase in the overhead transfer rate (OTR), will be under consideration when the agency’s board meets for a second time next week, this time on Friday, likely with its full complement of three members.

The meeting is set for Friday, starting at 10 a.m. ET; it will be live streamed via the Internet.

In November, the agency unveiled a $342.5 million budget that is 1.4% smaller than the approved 2020 spending plan. However, for the following year, the agency projects spending could be increased by 6.3%, reaching $364.2 million.

The 2021 budget also includes an increase of 1 percentage point from 2020 in the OTR – the rate at which the agency transfers funds from the National Credit Union Share Insurance Fund (NCUSIF) to cover “insurance-related costs” applied to the agency’s operating budget – to 62.3%. The remainder of the budget is funded by operating fees paid by federal credit unions.

NASCUS, in testimony last week before the NCUA Board at its public briefing about the 2021 budget, urged the agency to consider making changes to how it allocates expenses to insurance-related activities, in order to ensure balance, equity and that more funds are available to cover any losses that may occur due to the financial impact of the coronavirus crisis.

“The 1% increase in the OTR for 2021 means there will be $3.3 million less to cover losses by the fund,” NASCUS’s Lucy Ito told the board. She noted that NASCUS recognized its recommendations cannot be implemented for 2021, but that the state system hopes they would be considered for future budgets. “We want to work with NCUA,” she said.

The agency’s budget, often an annual focal point of comment and criticism from within the credit union system, has been the source of some controversy this year as well. At the November NCUA Board meeting, both Board Member Todd Harper and then-Board Member J. Mark McWatters said they could not support the 2021 budget as proposed, questioning some expenses, the decrease in the total budget in the face of the financial impact of the coronavirus pandemic, and the lack of funding for consumer protection compliance examiner staff. “As long as I remain on the board, I will continue to carefully review the proposed budgets and identify those items that are not truly important to the operations and mission of the NCUA,” McWatters said.

A day later, McWatters submitted his resignation from the board, citing the impending confirmation of his replacement on the panel, Kyle S. Hauptman. The Senate voted Dec. 2, 56-39, to confirm Hauptman to the seat held by McWatters, who had been serving in a holdover capacity since his term expired in August 2019.

Hauptman is expected to be sworn in as a board member before next week’s meetings, and to join in board deliberations at that session (as well as the Thursday session considering various final and proposal regulations, among other things).

LINK:
NCUA Board agenda, Dec. 18 meeting

(Nov. 25, 2020) Change is coming to the NCUA Board in the next 10 days or so, following change that already occurred late last week with the resignation of one of the board members. Here’s a quick rundown of what happened late last week, what’s scheduled to happen next week, and a look at what may be ahead for leadership of the agency.

• Last week, Senate Majority Leader Mitch McConnell (R-Ky.) announced (via the Senate’s executive calendar, which lists when executive branch nominees will begin to be considered by the Senate) that the nomination of Kyle S. Hauptman to be a member of the NCUA Board would be considered as early as Monday of next week (Nov. 30). Hauptman was nominated by outgoing President Donald Trump (R ) last summer to take the seat of J. Mark McWatters, whose term expired in August 2019; McWatters has been serving in a holdover capacity until his successor (Hauptman) was confirmed by the Senate. McWatters is a former chairman of the NCUA Board (succeeded by current Chairman Rodney Hood last year), who was named to that position by Trump.
• On Thursday, during the regular monthly meeting of the NCUA Board, both Board Members McWatters and Todd Harper expressed some dissatisfaction with the proposed NCUA budget for 2021, which is scheduled to be the subject of a Dec. 2 briefing by the agency (and which NASCUS has requested to provide comments for). McWatters also announced that he would not support the 2021 staff budget as drafted “as long as I’m on this board.” The NCUA Board is scheduled to consider the 2021 budget at its next monthly meeting, set for Dec. 17.
• Late Friday, McWatters released a copy of a letter he said he had sent to Trump that day informing the president that he was submitting his resignation. “As the Senate is scheduled to confirm my successor in the next few days, I hereby resign my position as of today,” McWatters wrote.
• Monday, Hood publicly released a statement noting McWatters’ resignation, observing that “his years on the NCUA Board are a credit to his decades-long career in law and policymaking. I wish Mark all the best in his future endeavors.” (NCUA Board Member Todd Harper – who also voiced concerns about the budget – released a statement on social media reading (in part) “Mark leaves the Board with a commendable record of achievement, and I wish him well in his future endeavors.”)

The end result of all of this: When the NCUA Board meets Dec. 17 to consider the 2021 budget – including the overhead transfer rate (OTR) for the NCUSIF portion of the agency spending plan – there could be one new face on the board, and perhaps two votes in favor of the agency’s budget for next year.

Looking ahead, with the transition of President-elect Joseph R. Biden (D) now officially underway in advance of the Jan. 20 transfer of power from Trump, there is likely to be more change. The new president will be in a position to designate a new chairman of the NCUA Board (that position is not confirmed by the Senate if the individual has already been confirmed as a board member). As the only Democrat-appointee on the board, Harper is in line to become the next NCUA Board chairman if the president decides to take action.

The most recent example of the president tapping a member of his own party to be chairman: McWatters was named acting chairman of the agency board by Trump on Jan. 26, 2017 – six days after taking the oath of office as president. McWatters replaced Rick Metsger who remained on the board (ultimately to be succeeded by Hood). The “acting” part of McWatters’ title was removed by Trump in June of that year.

Harper’s term on the board ends in April; however, he may serve on the board until a successor is confirmed by the Senate. Hood’s term ends in August 2023; Hauptman, if confirmed, would inherit a term that runs to August 2025.