Editor’s Note: This is the second of a two-part op-ed. The first part can be found here.
By Rick Metsger
Shortly after Donald Trump became president and my Republican colleague, Mark McWatters, was designated NCUA chairman, the consequences of a leadership change in the White House continued to ripple through the agency.
Todd M. Harper, my director of Public and Congressional Affairs (PACA), a political appointee, was terminated and replaced by presidential edict. Political appointees have no job protection and no due process rights, even if they have served honorably for six years. The agency lost a talented communicator and considerable legislative expertise and connections. Such is the blunt instrument faced by political appointees when the winds of change begin to blow. Elections have consequences, but not always positive ones.
A Turnstile
The Trump Administration vowed it would replace the old guard with “only the best people.” Since that pronouncement, the PACA office has evolved into an active turnstile, with five different people taking the role of PACA Director or Acting Director in the last four years. Hiring and retaining excellent talent takes more than pronouncements.
In true Shakespearean irony, exactly four years later, that same Todd. M. Harper, my former staffer, is about to be designated the next chairman of the NCUA when Joe Biden is sworn in as president on January 20. The pink slips will be under his control. Karma should never be given short shrift.
The peaceful transfer of power is a fundamental cornerstone of American democracy. When the time came to turn over the gavel to Board Member McWatters following the 2016 election, I did not deliver it through the back of his head. My staff and I worked diligently to support the new chairman in every way possible. I had no concerns that the collaborative relationship we had built under my leadership would not continue under a change in the seating arrangement. History proved my assumption to be correct. As a result, we were able to seamlessly continue advancing the safety, soundness, and financial access goals of the NCUA.
Olive Branch Vs. Karma
If Board Member Harper feels slighted by a lack of transparency and inclusion in his current role, he will have a choice as the new chairman to offer his predecessor either an olive branch or a heavy dose of karma.
Having worked closely with Board Member Harper during my term of service at NCUA, I fully expect the olive branch to be extended. He understands the importance to the credit union system of collaboration and inclusion if the needs of over 120-million American credit union members are to be fully realized.
Mr. Hood will then have to decide his own course of action. Having lost the chairmanship can find one feeling they have been U-Hauled somewhere deep into the suburbs on the southside of oblivion. Funding priorities may also shift from a half-million dollar secretive contract signed without the knowledge of the other two board members, that media reports suggest was heavily focused on self-promotion of the chairman, to priorities like enhancing consumer protection and serving the underserved.
Earlier Examples
There will not be as many chairs needed in the waiting room as staff and advocates scamper to the other end of the hallway to offer any necessary mea culpas for prior behavior and seek the goodwill of the new chairman.
When then Chairman Mike Fryzel lost his post to Debbie Matz after the election of Barack Obama, he faced a similar crossroad. Did he want to remain a player or an obstructionist? He no doubt observed the policy friction that often occurred between Matz and her fellow Democratic board member, Gigi Hyland.
Fryzel was politically astute, and he chose to fill the void and become an ally of Matz whenever possible during the early years of her chairmanship. As a result, he was able to continue having an influence on the final policy direction of the aAgency.
Hood, or, if confirmed by the Senate, Kyle Hauptman, could each decide to embrace that role and become a formidable influencer.
Harper, I believe, will move quickly to restore some policies and programs at the agency that were lost because of Trump Administration edicts.
Where to Start
As a starter, he can make it clear to all staff that the open exchange of information and ideas is not only welcome but encouraged. Every board member will once again be treated as equal partners in the governance of the agency. As I told Mark Treichel, the then executive director of the agency when I became chairman when he offered his loyalty, I said I didn’t want his loyalty, but I did expect his loyalty to the mission of the agency and that he would offer unvarnished opinions and options to help me make the best decisions possible.
One of the most valuable tools at the agency during my tenure was our Labor-Management Partnership Council. This was a collaborative council of management and union personnel that worked on building trust and cooperation. When issues developed, the group worked to resolve them early before they manifested into larger and more costly bargaining or arbitration disputes. Trump ordered it dissolved. Restoration of the council would begin the process of tearing down the walls of division and rebuilding the bridges that are essential to a productive workforce.
Reopening the Door
The Office of Minority, Women, and Inclusion (OMWI) will finally have the tire spikes removed from its office door. OMWI has been stymied in its mission to provide comprehensive training and programs that promote discussion of critical issues such as white privilege and its historical role in the nation’s workforce. Training has been banned and guest speakers cancelled. Harper is in a unique position to restore the dialogue immediately. The OMWI Director is the only agency director that by statute reports directly to the chairman and not the full board.
I would also expect him to ask for a detailed assessment of the financial risk of the ongoing pandemic to the agency and the credit union system. Many small and medium size credit unions have taken a hit because of increasing national unemployment. If the pandemic continues to rage, that hit may take a more serious turn when it comes to capital and liquidity. The results would likely not be totally clear until next year.
Examining Stress Cracks
Having taken part in the development of the Dodd-Frank legislation when he was a senior staffer on the House Financial Services Committee, Harper will want to examine any stress cracks emerging that could portend trouble for the National Credit Union Share Insurance Fund (NCUSIF)
Hood could also offer a unique perspective. He was on the board in 2008 when the financial crisis almost took down the Agency and the credit union system. He would certainly not want to experience deja vu and could offer valuable insight from lessons learned.
Harper is likely to continue to push Congress on legislation to provide vendor authority to NCUA for oversight of certain CUSOs and other vendors that might pose a threat to the NCUSIF. Credit unions are rightfully tired of paying for mistakes made by a few credit unions who like to gamble with other people’s money. Third-party vendor oversight is gaining traction on Capitol Hill and in these troubled economic times it may finally get some attention.
Time for Commitment
It is doubtful there will be any significant new regulatory rules adopted in the foreseeable future as so much unfinished business remains on the agency docket. Rules promulgated because of new legislation is likewise highly doubtful with split government likely in the next two years.
The winds of change will shuffle the deck furniture at NCUA and establish new priorities, but hopefully the board will unite under a common goal of navigating the credit union system through any troubled waters that may lie ahead. Just as with the country, it is time for unity, mutual respect for opposing views, and a commitment to the common good.
Rick Metsger is the former chairman of NCUA.