WASHINGTON — Mark McWatters, President Obama's choice to serve on the NCUA Board, told a Congressional committee Thursday regulators need to consider the potential unintended consequences of their decisions.
He also promised to bring a transparent regulatory perspective to the position.
"Lawyers and regulators need to take a step back and apply the law with impartiality and look at the larger picture. They need to think both tactically and strategically, considering not just the desired outcome, but potential unintended consequences," McWatters said in his prepared remarks for his Senate Banking Committee confirmation hearing.
"As such, my focus as a regulator will remain straightforward: Don't neglect the fundamentals of capital, liquidity, and transparency, and always remember that the greatest threat to a financial system may reside where you least expect it — hidden within plain view," he added.
While assessing the risks inherent within financial institutions, McWatters said he has learned that basic issues lead to difficult questions.
"Do financial institutions have the capital, liquidity and risk mitigation programs necessary to operate in an unexpectedly adverse economic environment? And are their financial statements transparent and understandable, so that it's possible to assess their business strategies and contingent liabilities?" he cited as examples of key questions.
McWatters thanked Senate Minority Leader Mitch McConnell (R-Ky.) for recommending him to Obama for the position. However, unlike the other nominees, he did not thank Obama in his comments.
"If confirmed, I will bring my 30-plus years of legal experience, accounting training, general understanding of the broader financial markets, an open mind, and a risk-based, market-oriented, targeted and transparent regulatory perspective to address the increasingly complex and sophisticated issues facing credit unions," he said.
McWatters vowed to balance competing viewpoints while maintaining the safety and soundness of the credit union system, safeguarding the share insurance fund, enforcing consumer protection rules, and protecting taxpayers and credit union members from losses.
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