Dear Report reader:
The Senate Banking Committee has scheduled a
hearing for the NCUA Board nominee sent forward by the White House. If he
is seated quickly, what does that mean for credit unions?
Best,
Geoff Bacino
Partner
Bacino & Associates
332 Commerce St, Suite 100 | Alexandria, VA 22314
Geoff@BacinoAssociates.com |
202.549.0253 Direct | 703.348.7602 fax
BACINO REPORT
NCUA – The Supreme Court declined to hear the American Bankers Association’s appeal of its lawsuit against NCUA regarding its Field of Membership rule. This clears the way for the agency to return to processing field of membership expansion requests. Much of the credit must be given to the NCUA’s General Counsel’s office for crafting a well-written rule that withstood a number of legal challenges. The ABA announced that they would now take their case to Congress.
As expected, the White House nominated Kyle Hauptman to fill the expired term of Board member Mark McWatters. McWatters’ term ended in August of 2019 and he has been serving as a holdover Board member until his successor could be confirmed. Hauptman currently serves as the Economic Policy Advisor to Senator Tom Cotton (R-AR) and has held a number of prominent positions, including as a member of the 2016 Presidential Transition Team and of the SEC’s Advisory Committee for Small and Emerging Companies. Democrats have few options to hold up the confirmation process (see Reid, Harry 2013), while Senate Majority Leader Mitch McConnell (R-KY) and Senate Banking Committee Chairman Mike Crapo (R-ID) could push the Hauptman nomination through before Congress adjourns.
The Senate Banking Committee has announced that it will hold a confirmation hearing for Hauptman on July 21st. If Hauptman were to be seated, it sets up an interesting dynamic if VP Joe Biden is elected President in November. With Hauptman’s term expiring in August 2025 and Chairman Hood’s term expiring in August 2023, it would mean that the Democrat who replaces Board member Todd Harper in April of 2021 would walk in the door and already be in the minority. The Republicans would own a 2-1-majority vote margin, with the new Democrat as the Chairman since Biden would be President. It would make for some interesting horse-trading…or it could mean that the Chairman of NCUA could see few, if any, of their proposals come to fruition.
SUPREME COURT - Normally, the Report does not cover Supreme Court actions, but the last batch of decisions that were recently released could have a lasting impact on credit unions and their members. In addition to the aforementioned FOM case, the Court also ruled on the constitutionality of the presidentially appointed director of the Consumer Finance Protection Bureau (CFPB). The Court ruled that the President could fire the CFPB director. Previously, the head of the CFPB could only be removed for inefficiency, neglect of duty, or malfeasance in office. In an effort to protect the agency from political interference, the writers of the original bill mandated a fixed term similar to those of an NCUA Board member. The issue for the Court, in the words of Chief Justice Roberts, is the “very significant government power in the hands of a single individual, accountable to no one.”
The previous rules and actions of the CFPB were not impacted and while the Court did not consider the status of the director of the Federal Housing Finance Agency (FHFA), the Court did note that the FHFA was a “companion” of the CFPB. It may set up a situation where a Biden White House could remove Dr. Calabria from his position as FHFA Director. Another option – one that circulated when the FHFA was being debated on Capitol Hill – would be to install a board similar to that of the NCUA, the SEC and the FDIC where board terms could expire on a rotating basis allowing for a variety of opinions and thoughts among the three or five board members. This also allows for appointees from both sides of the aisle.
Credit unions are impacted by the FHFA through its oversight of Fannie Mae and Freddie Mac. How the mortgage giants are constituted affects pricing and availability. In addition, FHFA also regulates the Federal Home Loan Banks. Their role as mortgage lenders and liquidity providers can be of great benefit to those credit unions that effectively utilize this option.
PRESIDENTIAL RACE – A number of issues confront President Trump as we enter the last four months of the presidential race. From the pandemic to Black Lives Matter to the economy to the Russian- paid bounty hunters, the President is getting hit from all sides. Unlike 2016, it appears that the “us against them” mentality won’t be enough to garner Trump the 270 electoral votes that he needs to secure a second term. Joe Biden leads in every reputable poll and, more importantly, in most of the swing states. Hillary Clinton can attest to the fact that winning more overall votes is nice but it’s the Electoral College that decides elections and in those swing states that will decide this election, Biden is leading. This includes Pennsylvania, Wisconsin, North Carolina, Florida, and Arizona. Biden has even pushed Texas and Iowa into the “toss-up” category. Yes, four months is a long time in politics, but there is a gambling phrase that “the trend is your friend” and the trends are favoring Biden at this point.
SENATE 2020 – Democrats continue to be buoyed by the early returns in the Senate races that will determine control of the Senate chamber. Races that the Democrats need to win to garner that control are looking favorable for the Democratic candidates. North Carolina, Arizona, Iowa and Maine. Democrats are hoping that Biden can post large vote totals that will push some of these Senate candidates to victory. As divided as this country is, there doesn’t seem to be much appetite for split ticket voting so a blue tsunami could serve to raise the boats of all Democratic candidates.
I DON’T WANT TO NAG – I asked for your thoughts about a credit union version of the banker’s Friends of Traditional Banking Super PAC…and I didn’t receive many responses. Is this a way of leveling the playing field? Is this an interesting concept? Give me your thoughts at Geoff@bacinoassociates.com.
SAYONARA TO THE CUSO GURU - For most credit union professionals, Guy Messick is the one to turn to when discussing CUSOs. He has served on the Board of a number of CUSOs, but is best known for being the General Counsel to the National Association of Credit Union Service Organizations (NACUSO). He recently announced his retirement. Thanks Guy for all your hard work on behalf of the nation’s CUSOs!
As expected, the White House nominated Kyle Hauptman to fill the expired term of Board member Mark McWatters. McWatters’ term ended in August of 2019 and he has been serving as a holdover Board member until his successor could be confirmed. Hauptman currently serves as the Economic Policy Advisor to Senator Tom Cotton (R-AR) and has held a number of prominent positions, including as a member of the 2016 Presidential Transition Team and of the SEC’s Advisory Committee for Small and Emerging Companies. Democrats have few options to hold up the confirmation process (see Reid, Harry 2013), while Senate Majority Leader Mitch McConnell (R-KY) and Senate Banking Committee Chairman Mike Crapo (R-ID) could push the Hauptman nomination through before Congress adjourns.
The Senate Banking Committee has announced that it will hold a confirmation hearing for Hauptman on July 21st. If Hauptman were to be seated, it sets up an interesting dynamic if VP Joe Biden is elected President in November. With Hauptman’s term expiring in August 2025 and Chairman Hood’s term expiring in August 2023, it would mean that the Democrat who replaces Board member Todd Harper in April of 2021 would walk in the door and already be in the minority. The Republicans would own a 2-1-majority vote margin, with the new Democrat as the Chairman since Biden would be President. It would make for some interesting horse-trading…or it could mean that the Chairman of NCUA could see few, if any, of their proposals come to fruition.
SUPREME COURT - Normally, the Report does not cover Supreme Court actions, but the last batch of decisions that were recently released could have a lasting impact on credit unions and their members. In addition to the aforementioned FOM case, the Court also ruled on the constitutionality of the presidentially appointed director of the Consumer Finance Protection Bureau (CFPB). The Court ruled that the President could fire the CFPB director. Previously, the head of the CFPB could only be removed for inefficiency, neglect of duty, or malfeasance in office. In an effort to protect the agency from political interference, the writers of the original bill mandated a fixed term similar to those of an NCUA Board member. The issue for the Court, in the words of Chief Justice Roberts, is the “very significant government power in the hands of a single individual, accountable to no one.”
The previous rules and actions of the CFPB were not impacted and while the Court did not consider the status of the director of the Federal Housing Finance Agency (FHFA), the Court did note that the FHFA was a “companion” of the CFPB. It may set up a situation where a Biden White House could remove Dr. Calabria from his position as FHFA Director. Another option – one that circulated when the FHFA was being debated on Capitol Hill – would be to install a board similar to that of the NCUA, the SEC and the FDIC where board terms could expire on a rotating basis allowing for a variety of opinions and thoughts among the three or five board members. This also allows for appointees from both sides of the aisle.
Credit unions are impacted by the FHFA through its oversight of Fannie Mae and Freddie Mac. How the mortgage giants are constituted affects pricing and availability. In addition, FHFA also regulates the Federal Home Loan Banks. Their role as mortgage lenders and liquidity providers can be of great benefit to those credit unions that effectively utilize this option.
PRESIDENTIAL RACE – A number of issues confront President Trump as we enter the last four months of the presidential race. From the pandemic to Black Lives Matter to the economy to the Russian- paid bounty hunters, the President is getting hit from all sides. Unlike 2016, it appears that the “us against them” mentality won’t be enough to garner Trump the 270 electoral votes that he needs to secure a second term. Joe Biden leads in every reputable poll and, more importantly, in most of the swing states. Hillary Clinton can attest to the fact that winning more overall votes is nice but it’s the Electoral College that decides elections and in those swing states that will decide this election, Biden is leading. This includes Pennsylvania, Wisconsin, North Carolina, Florida, and Arizona. Biden has even pushed Texas and Iowa into the “toss-up” category. Yes, four months is a long time in politics, but there is a gambling phrase that “the trend is your friend” and the trends are favoring Biden at this point.
SENATE 2020 – Democrats continue to be buoyed by the early returns in the Senate races that will determine control of the Senate chamber. Races that the Democrats need to win to garner that control are looking favorable for the Democratic candidates. North Carolina, Arizona, Iowa and Maine. Democrats are hoping that Biden can post large vote totals that will push some of these Senate candidates to victory. As divided as this country is, there doesn’t seem to be much appetite for split ticket voting so a blue tsunami could serve to raise the boats of all Democratic candidates.
I DON’T WANT TO NAG – I asked for your thoughts about a credit union version of the banker’s Friends of Traditional Banking Super PAC…and I didn’t receive many responses. Is this a way of leveling the playing field? Is this an interesting concept? Give me your thoughts at Geoff@bacinoassociates.com.
SAYONARA TO THE CUSO GURU - For most credit union professionals, Guy Messick is the one to turn to when discussing CUSOs. He has served on the Board of a number of CUSOs, but is best known for being the General Counsel to the National Association of Credit Union Service Organizations (NACUSO). He recently announced his retirement. Thanks Guy for all your hard work on behalf of the nation’s CUSOs!
332 Commerce St Suite 100 | Alexandria, VA 22314 | p. 202.549.0253 | f. 703.348.7602 | www.BacinoAssociates.com
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