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McWatters talks risk-based capital, reg burden at nomination
WASHINGTON (3/14/14)--National Credit Union Administration board member nominee J. Mark McWatters said at his confirmation hearing Thursday that a risk-based capital approach
Click to view larger image NCUA nominee J. Mark McWatters (far right) greets Sen. Mike Crapo of Idaho, who is the ranking Republican member of the Senate Banking Committee, before that panel begins its confirmation hearing for McWatters and four other Obama nominees. Sen. Bob Corker (R-Tenn.) is in the background. (CUNA Photo)
"makes sense" for credit unions, but warned the "devil is in the details" of any proposal.
He told Senate Banking Committee members that examining the overall issue in general and the NCUA's proposal specifically would be high on his list of priorities if he is confirmed to join the NCUA board.
That proposal, issued in January, was one of many regulatory issues the potential NCUA board member brought up in response to a question from the committee's chairman, Sen. Tim Johnson (D-S.D.). Overregulation of small credit unions is another challenge, he said, adding that the NCUA has made some progress in this area, but more needs to be done.
The principle challenge for credit unions and the credit union system, McWatters stated, is to look to the future and anticipate the next systemic shock. This applies to both credit unions and banks, he noted, and said that while regulators look for future problems, they must also exercise judgment. "If you are always crying wolf, you'll be considered a flake," he said.
The greatest opportunity for credit unions, the NCUA nominee asserted, is to continue doing what they are doing now. Credit unions' membership and loan base are growing, and many low-income credit unions have the chance to expand their mandate to those who are underbanked and unbanked. Underbanked and unbanked Americans need financial services at a reasonable rate, McWatters added.
In his opening remarks, he briefly previewed his overall approach to regulation in his opening statement, saying his focus as a regulator "will remain straightforward: Don't neglect the fundamentals of capital, liquidity, and transparency, and always remember that the greatest threat to a financial system may reside where you least expect it--hidden within plain view."
McWatters also pledged to "work diligently to ensure the continued integrity and safety and
Click to view larger image McWatters testifies that his approach to regulating credit unions will be "straightforward." (CUNA Photo)
 soundness of our nation's credit union system in an ever-evolving marketplace...I will aim to balance competing viewpoints while maintaining the safety and soundness of the credit union system, safeguarding the Share Insurance Fund, enforcing consumer protection rules, and protecting taxpayers and credit union members from losses," he said.
Johnson said McWatters will hit the ground running with an eagerness to learn more about credit unions. He called for all nominees at Thursday's hearing to be confirmed quickly. Sen. Elizabeth Warren (D-Mass.) also commented on her work alongside McWatters on the TARP Congressional Oversight Panel. She commended McWatters as "smart, thoughtful and principled."
McWatters said he intends to work with NCUA board members, agency staff and external stakeholders "in an open and respectful manner, with the goal of finding a common ground and working cooperatively through any differences." This approach has worked for him in past positions, he said. In addition to his work on the TARP panel, McWatters has served as counsel for Rep. Jeb Hensarling (R-Texas) and as dean for graduate programs at Southern Methodist University's School of Law.
If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2. Fryzel will continue to serve until McWatters is confirmed.
The committee also reviewed the qualifications for Stanley Fischer, as a member and vice chairman of the Federal Reserve Board; Jerome Powell, as Federal Reserve Board governor; Lael Brainard, as a Fed governor; and Gustavo Aguilar, to be an assistant secretary for the U.S. Department of Housing and Urban Development.


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