Editor’s Note: This column was first published on ChipFilson.com and is reprinted here with permission.
By Chip Filson
In a recent public letter to the NCUA staff, Chairman Todd Harper announced he was “stepping away from daily duties” for back surgery. He expects to return to “my full duties in July.”
His only reference to how the agency would be led was that, “I know the NCUA team will not miss a beat” and “will continue executin the agency’s mission.”
The extended withdrawal by a chair from his daily duties for an extended period is unprecedented. It left unclear what, if any role, Harper will play while away.
The Critical Questions
The uncertainty about this unusual self-managed leave raises many questions about the agency’s leadership.
The demands on any leader are tough. Some organizations build in predetermined sabbaticals for top officials to recharge and reflect. It Is critical that senior, public officials be proactive as Harper states in “addressing their physical and mental health needs.”
It is important however that the organization have ongoing decision making and clear responsibility assigned for the agency’s vital roles, such as:
- Who will determine the board schedule and meeting agendas?
- Who will represent the agency in testimony before Congress? On the FSOC and other interagency roles?
- How will programs, projects and priorities be overseen in the absence of the chair?
- What is the process for taking supervisory actions that require board approval?
NCUA has had a two-person board in the recent past. Chair Mark McWaters and board member Rick Metzger is the most recent example. They made several momentous decisions, including the merger of the TCCUSF with the NCUSIF and raising the NCUSIF’s NOL for the first time in its history above 1.3% to accommodate the new surplus funds.
The question is not about function, but about how important internal decisions (personnel, spending, organizational alignment) and external responsibilities are to be carried out.
An Opportunity for “Team” Members
For some time, the role of the NCUA board has been downplayed. In February, the board for the first time since 2017 ignored past policy and practice to set an NOL above 1.30% without any supporting documentation or modeling. This was a commitment that Chairman McWaters said future NCUA boards should follow after the 2017 merger with the TCCUSF when raising the NOL.
The March board meeting was cancelled. The 30-minute April public meeting had only one item, a proposed rule, and the chair attended virtually.
In any organization, when the CEO is absent there should be a continuing chain of command and authority. This role will initially fall to Vice Chair Kyle Hauptman and member Tanya Otsuka immediately. May’s board meeting will be the first demonstration of their response and how they see their responsibilities.
One approach would be to be more public in the many areas that fulfill the agency’s core functions of safety and soundness. They could request staff to make timely reports on the financial status of the NCUSIF and the operating fund (March data is still not available).
There could be updates on the state of the examination program, the single most important role in monitoring credit union performance. Will an annual exam be completed for all FCUs over $1 billion?
Opportunity to Take Lead
The Inspector General has had several projects that would merit public discussion including the review of the new credit union chartering process. There could be a discussion of the agency’s personnel policy requiring in office attendance only two days per pay period and its effect on culture and performance.
In short, the two board members could take the lead in showing that they are “watching the store” and that staff continues to complete essential responsibilities in a timely manner. Moreover, it would give both board members a platform to state their views or request input on other topics that credit unions feel should be addressed.
A Vacuum of Power and Accountability
Harper’s absence leaves a vacuum at NCUA. The chair is the primary spokesperson for the multiple constituencies for which NCUA is accountable. The Senate banking committee approves all board members and the House provides periodic oversight. The Administration nominates all NCUA board members and establishes policy priorities.
Most importantly, more than 100 million member-owners through their 4,600 credit union organizations depend on clear rules of the road and assurance the money they send to the agency, is used wisely. The credit union professionals are constantly reacting to market changes. Is NCUA paying attention to their concerns to meet member needs?
Harper’s note to staff addressed none of these accountabilities. A leadership vacuum may tempt some to exercise some long sought ambitions. For others, it will be an excuse to do nothing and just get by. Wait for the boss to come back.
The Next Man Up
But for some it will be an opportunity “for the next man up.” That is the phrase used when a teammate is injured, or in conflict when the ranking leaders go down. It is what happens in life when a spouse (breadwinner or homemaker) dies--the family must learn new responsibilities.
Harper’s statement left all options open for responsive Agency leadership. Who will step up to their new roles? How can credit unions monitor and inform during this time of NCUA uncertainty?
The essence of cooperatives is that we are all in this together.
Chip Filson is a co-founder of Callahan & Associates and well known within credit unions as an author, frequent speaker, and consultant. Filson also previously served as president of the Central Liquidity Facility (CLF) and Director of the Office of Programs at NCUA. For more info: www.chipfilson.com.