Of all the dramatic twists and turns in the first two seasons of the Netflix series House of Cards, my favorite scene was the final one in the pilot episode.
At dawn, Washington power players were shocked to read a page one story in the fictional Washington Herald newspaper that detailed a leaked education draft bill. As the rich and powerful reacted to the news, frantically reshuffling alliances, the scene transitioned to show Reporter Zoe Barnes, who wrote the story.
In stark contrast to her story subjects' chauffeured Town Cars and resplendent Capitol Hill offices, the journalist sat on the toilet in her slummy efficiency apartment, scrolling through her phone, blissfully unaware of what she had done.
Each week, when I write my column, I can't help but wonder if anyone actually reads it. Because journalists choose early on to be fearless or fail, we sometimes forget our words have power.
I was reminded of that Thursday when I met NCUA Board Member Mark McWatters. Not only does he read my columns, he said he learns something new from them each week.
Imagine that. I'm schooling a White House-nominated professor.
So with that in mind, this week I'd like to dedicate my column to McWatter's ongoing credit union education. Following are four things McWatters should know about his new job.
1. Credit unions are exactly like banks. They are also nothing like banks.
Financial services are commodities. Most checking accounts and car loans are pretty much the same. When it comes to the economy, financial markets, regulatory burden, competition and cybersecurity, what's good for banks is good for credit unions. However, it takes a while to truly understand the philosophical difference between the two. Credit unions genuinely value the financial success of their members over profits. For an NCUA board member, that means approaching comment letters and other requests with an open mind. Credit unions don't ask for favors for themselves, but for their members, who represent roughly one-third of American consumers.
2. Regulations are killing the industry.
The NCUA is required to maintain regulatory parity with the FDIC. On the surface, this isn't a bad idea. After all, credit union mortgages are bought and sold in the same marketplace as banks', their transaction accounts function in the general consumer marketplace and they face similar fraud challenges. However, credit unions succeeded because they were able to make flexible underwriting decisions that allowed them to serve consumers who couldn't obtain financial services from banks. Since the Great Recession, credit unions have been increasingly subjected to cookie cutter regulations that have greatly reduced that flexibility. The risk-based capital rule is a good example. Yes, an institution that holds a significant percentage of assets in a single category carries more risk. But the common bond foundation of credit unions requires them to develop a niche strategy to serve those common needs. If credit unions are unable to differentiate themselves in the marketplace due to regulatory burden, they won't survive.
3. A lack of regulations almost killed the industry.
On the other end of the regulatory scale, a lack of restrictions on corporate investments and cozy relationships between corporates and their in-house examiners nearly destroyed everything. If the U.S. Treasury hadn't generously financed the industry's bailout, there wouldn't even be an NCUA board. McWatters must decide where to place the regulatory fulcrum so the NCUA strikes the perfect balance between safety and soundness and credit unions' ability to serve members.
4. This might be a good time to take on a new hobby.
Credit unions aren't rocket science, and once McWatters learns the lay of the land, he may find the board member role isn't necessarily a full-time job. CU Times is currently investigating whether board members even need to relocate to Washington full time, given technology advances in communication and accomplished staffers running the agency's day-to-day operations. Judging by his resume, McWatters prefers a full schedule. Granted, any job is what you make of it, but if the board member has ever wanted to build an airplane in his garage or write the great American novel, this might be that chance.
What else does McWatters need to know about credit unions? Please add your ideas to the comments below or shoot me a letter to the editor.
Heather Anderson is executive editor of CU Times. She can be reached at [email protected].
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