NCUA Board Facing Potentially Contentious Issues

The NCUA board on Thursday is scheduled to consider several potentially contentious issues during a meeting that likely is Rodney Hood’s last as chairman of the board.

As usual, in releasing the agenda, the agency did not provide details of the proposals the board will be considering. However, the agenda includes a proposal rule on Risk-Based Net Worth. The board had been scheduled to consider a rule on that subject last year, but it was pulled at the last minute, without any explanation.

There was speculation at the time that Hood might not have the votes to pass a proposed rule, since Democrat Todd Harper and Republican J. Mark McWatters were indicating their opposition to several of Hood’s proposals.

However, Republican Kyle Hauptman has replaced McWatters and may be more amenable to Hood’s proposal.

When President-elect Joe Biden is sworn in, he likely will appoint Harper as chairman. Hood scheduled the meeting for the second Thursday of January—before Biden is sworn in, rather than the usual third or fourth Thursday which would be after Biden is president.

The board also is scheduled to consider an Advance Notice of Proposed Rulemaking on the simplification of Risk-Based Capital Requirements, but no details of that proposal were available either. Risk-based capital also has been a contentious issue in the past.

The board also will consider a proposed rule on CUSOs, a notice of proposed rulemaking on the CAMELS rating system and the agency’s annual performance plan.

The board also will meet in closed session to consider issues that may be discussed in private, including supervisory and personnel actions.

Harper may be chairman by the time the board meets in February.

With two Republican members, GOP members could continue to seek approval of rules they want the board to consider, even though they no longer will control the chairmanship.

However, former NCUA Chairman Rick Metsger, a Democrat, said that since Democrats will now control the House, the Senate and the White House, Harper will have a mechanism he can use to try to void those actions.

Under the Congressional Review Act, Congress may pass a measure voiding a final rule. The president would have to sign the measure for the rule to be voided.

Metsger said that Harper likely would have the support of House Financial Services Chairwoman Maxine Waters (D-Calif.) and incoming Senate Banking Chairman Sherrod Brown (D-Ohio) in such an effort.

Metsger said that Harper could also use the CRA as a threat to force Republican members to negotiate contentious issues.

“He could use it as leverage,” Metsger said. “It could force combatants to the table.”