Politics played a heavy hand when Senate Banking Committee Chairman Richard Shelby (R-Ala.) refused to budge on moving nominations out of his committee. He has said he wants to see a nomination for the vice chairman of supervision at the Federal Reserve first, leaving McWatters’ nomination in limbo.

Senate Majority Leader Mitch McConnell (R-Ky.) has been applying pressure on Shelby to take up the nomination, but Shelby has defied the majority leader.

Shelby's refusal has garnered support. Club for Growth, a conservative political action group, released a statement praising his inaction. The group's president, David McIntosh, said, “By holding up the appointment of a new Ex-Im director, Senator Shelby is doing taxpayers a favor by blocking the flow of corporate welfare to massive companies that are still demanding favors from the federal government.”

Whether Shelby will move on any of the nominees is still unknown. A recent Senate Banking Committee vote on SEC nominations was postponed after Democrats united against the nominees and the committee was unable to forward the block.

Neither Shelby nor McConnell's offices returned calls seeking comment.

“I think [Shelby] has serious concerns about the Export-Import bank,” NAFCU President/CEO Dan Berger said. “It's not a McWatters issue, I think it's a Ex-Im Bank issue.”

Moving Forward

Meanwhile, trade groups are operating under the assumption that the NCUA board will have two members. Berger stressed the board should continue its course and focus on regulatory relief.

“Regulatory relief has been our top priority for years and that will continue to be the case, even after Chairman Matz’ departure,” he said. “But if prior remarks by Vice Chairman Metsger and Board Member McWatters signaling their support for additional regulatory relief measures are any indication, I think we are pretty encouraged that opportunities for true regulatory relief will be considered by a two member board.”

However, regulatory relief could slow measurably with a two-member board, according to remarks McWatters made at the recent NACUSO Network Conference earlier this month in Las Vegas. He said the idea of a regulatory moratorium has a little more teeth to it now that the board is split evenly by party.

McWatters added he would not vote in favor of new regulations without evidence of the credit union community being in danger. He further suggested the agency handle potential issues through supervision.

His comments mirrored earlier statements he made during CUNA's Governmental Affairs Conference in February, when he called for a moratorium on any new rules and a look at current rules to ascertain whether any are out of date.

However, given McWatters’ potential move to the Ex-Im Bank, the clock is running out on issues he supports. For example, he has been a strong advocate of expanding to an 18-month examination cycle.

Cooperative Credit Union Association President/CEO Paul Gentile has also been a long-time advocate of lengthening the exam cycle for low-risk credit unions.

“I think it's a great opportunity for the two-person board to handle some of the administrative issues that are really pressing at the agency, such as the extended exam cycle that banks are enjoying,” he said. “You certainly don't need a three-person board to address that.”

Trade groups also support an extended exam cycle. Berger said NAFCU will continue to press the NCUA on the issue.

Another action item for the remaining board members will involve McWatters’ push on supplemental capital, which he said is languishing. At NACUSO, he called for a supplemental capital proposal around the time of the FOM proposal.

Metsger has led the charge for FOM reform. The agency expects a final rule on FOM this year, which could be a crowning achievement for Metsger, whose term expires in August 2017.

“Metsger has been driving that forward,” CUNA's Senior Director of Advocacy/Counsel Lance Noggle said. “Keeping that champion on the board is good. We don't want to see a lack of a chairman slow [the FOM proposal] down at all.”

NASCUS President/CEO Lucy Ito added, “The record for both Metsger and McWatters shows that they actually are doers.”

She cited Metsger's push for FOM modernization as an example of the type of work of which he is capable.

“People forget that and it's probably one of the most significant things for the credit union system in terms of future growth prospects,” she said. “I think that gives an indication that he's interested in doing other things.”

Ito said she does not anticipate a stalemate on issues by the two.

“That would be a waste of very precious time for the credit union system,” she said.

Calling the two remaining board members measured, Ito noted McWatters’ push for transparency and accountability at the NCUA is his way of pursuing fair and balanced regulation.

“I think they are both careful, so they aren't going to be hasty about things,” she said. “They strike that balance at being constructive and being productive, yet making sure they are informed, as the common denominator.”

The immediate period following Matz’ departure could be a good time for the board to address administrative issues, according to Gentile. Among the issues the board should address is the call report deadline, he said.

“You certainly don't need a board vote to look at giving credit unions relief on the call report date,” he said. “This may be a great time to get the administrative actions done and get their house in order.”

Berger added, “We hope a two-member board doesn't slow down any ongoing reg relief measures we are working for. I think they will work together and hopefully find some common ground on providing additional relief for credit unions.”

If Congress moves forward on McWatters’ nomination, Metsger will be the solitary board member, something that is not unheard of. Former NCUA Board Chairman Dennis Dollar was the only board member for a short period during his tenure at the NCUA.

“Historically, it's not like it hasn't been done before,” Ito said. “It's Washington, D.C., so anything can happen.”