Introducing the NCUA Board Meeting’s Saving Grace, Todd Harper

News & Insights

A surprise hero has emerged from a recent NCUA Board Meeting as the new voice of reason: Board Member Todd Harper. On Thursday, June 20, NCUA held its monthly board meeting- this time to discuss yet again delaying the risk-based capital rule (despite the many other subjects they could have discussed based on recent headlines), which requires credit unions with assets over $100 million to report on their lending practices and hold additional reserves against riskier assets – an effective way to ensure safety and soundness for the industry as a whole.

NCUA has continuously surrendered this regulation to the wants of profit-hungry, billion dollar credit unions and found ways to further delay it year after year. Sadly, this meeting was no different – NCUA Chairman Rodney Hood and Board Member J. Mark McWatters (the same guy who enjoys expensing $45 glasses of whiskey) voted again in favor of the delay.  Harper, however, stayed resolute in his minority vote against the delay, saying he viewed it with “great skepticism,” and certainly didn’t shy away from asking some tough questions to his colleagues, proving he may be the only sensible person in this board room.

Harper unabashedly criticized the decade-long delay of the risk-based capital rule, introduced in 2012 and now potentially being pushed to 2022, asking “Do we really need a full decade to holistically and comprehensively evaluate capital standards?” Unfortunately, considering it took three years for NCUA to write a simple letter to prevent the taxi medallion failures, it’s certainly possible – yet not an excuse either way, and we’re glad Harper is pointing that out.

He even brought up the elephant in the room, a subject most NCUA board members are more likely to avoid than the plague: the $765.5 million loss to the National Share Insurance Fund. Harper highlighted the need for better and improved regulations through risk-based capital after such damaging losses, comparing his peers to the “characters in Groundhog Day” who were “forgetting the past repeatedly” and doing absolutely nothing to ensure disasters like this don’t happen again.

Harper also raised concerns that NCUA isn’t focused on matters that “pose the greatest risk” and continued to state that another delay will “produce consequences for the entire credit union system” – in addition to further losses in the already struggling share insurance fund, it could lead to the worsening of relations with the Government Accountability Office and the NCUA Inspector General’s Office.

We hope that Harper continues to protect taxpayers by taking on this battle against NCUA’s incompetence, even though he stands alone at the front line. Below are some of our favorite moments from the meeting where Harper schooled Larry Fazio, the primary director of Examination and Insurance at NCUA, by proving just how badly the risk-based capital rule is needed:

When Fazio didn’t even know when the federal reserve implemented its capital rule…

When Harper reminded Fazio that all banks, no matter how small, are not exempt from the risk-based capital rule…

When Harper emphasized how ancient the current regulations are…

When Harper implied that the system is broken if only one complex credit union fails (knowing up to seven failed in 2018)…

When Harper calls out Fazio and other NCUA leadership for irrationally reversing their stance on the implementation date of the risk-based capital rule and grills them on the increase of risk in the industry and a lack of action taken to mitigate that risk…

When Harper establishes there is no significant reason not to implement the risk-based capital rule, and Fazio has zero rebuttal…

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