Posts tagged ‘J. Mark McWatters’

Congress Moves Closer to Providing AML Relief

On Thursday, Congress moved closer to passing legislation which would relieve banks and credit unions of the most burdensome new Bank Secrecy Act requirement imposed on them in recent years. Negotiators have tentatively agreed to include the Corporate Transparency Act in the National Defense Authorization Act, which provides military funding for Fiscal Year 2021. It is considered must-pass legislation, although given the dysfunction in Washington, is there really any such thing anymore?

Enactment of the legislation would be a major victory for longtime Manhattan Congresswoman Carolyn Maloney, who has advocated for the passage of legislation like this for several years. In 2018, regulations took effect which required banks and credit unions to identify the beneficial owner of corporations and trusts. The intent of the regulation makes an awful lot of sense. One of the easiest ways for people to hide money is to create corporations that act as a front for their personal use. But the smartest way to get this information is to place disclosure requirements on the corporation. 

Under Representative Maloney’s bill, an applicant for a corporation or a limited liability company (LLC) would be required to file a report with FinCEN containing the identities of an entity’s beneficial owners. Under this legislation, as is required by existing FinCEN regulations, a beneficial owner is an individual who, directly or indirectly, controls a corporation or LLC; owns a certain percentage of such an entity; or generally receives “substantial economic benefits” from the company. We should know in a few weeks if this is going to become law. 

Drama at the NCUA

Maybe there was something in the water in our nation’s capital, but governing dysfunction has even infected the three-person NCUA Board. In case you missed it, J. Mark McWatters resigned on Thursday, ending a colorful six-year run in which he became the de-facto gadfly at the agency with his strict adherence to the plain text of NCUA’s regulation and governing law. You always got the feeling that he was not completely comfortable at NCUA. As early as 2016, he was in line to take another job at the Export-Import Bank of the United States. According to David Baumann, if McWatters did not resign, he was going to be fired by the White House, which it had the authority to do as McWatters’ term had already ended. If all goes according to plan, McWatters’ seat will soon be filled by Kyle Hauptman, but nothing seems to go smoothly in Washington these days.

November 23, 2020 at 9:30 am 1 comment

McWatters Telecommutes: So What?

It’s been more than a week now since the Washington Post reported what anyone who follows the NCUA has known for a while: Chairman J. Mark McWatters doesn’t care much for Washington and spends as little time there as possible. The article quotes an Executive Director who represents an organization of former lawmakers and cabinet secretaries as describing this unorthodox arrangement “unprecedented and incredibly troubling.” In fact the more I think about it, the real problem is that so many people find McWatters’ decision to base himself in Dallas rather than the nation’s Capital so troubling.

First, I find it refreshing that in an age when Congressmen retire to become Washington based lobbyists and agency heads don’t think twice about taking subsidized honeymoons on the company dime or getting a really great rate on Georgetown rental property, we actually have a public servant who wants to live out in the community among people impacted by his decisions. Washington would be a better place if policy makers spent less time in Washington.

To read the article you would think that the Chairman is the day-to-day manager of NCUA. If this is true then it’s time to change. For one thing, these are term limited positions: I hope the organization is structured so that the day-to-day operations can continue no matter who is ultimately in charge. We don’t need Chairman McWatters deciding who gets to play tennis when. In fact, the Chairman’s role should be much more analogous to that of the Chairman of the Board than to the head administrator of the agency. He sets the direction and holds staff accountable for getting the job done.

And let’s not forget just how radically McWatters tenure has been, first as a Board Member and now as Chairman. Since his arrival, he has breathed new life into old statutes to give credit unions greater flexibility in making member business loans and voted for amendments to chartering regulations that give credit unions greater flexibility to serve more members. He has also advocated for budget restraint and a more transparent budget process. Finally, he has been the sole voice of reason questioning the need for larger credit unions to be subject to advanced risk based capital requirements. I’m still hopeful that we will get another board member who will work with to pair back this pending requirement. With a record like that, he can stay in Dallas all he wants.

Then there is the suggestion that NCUA can’t possibly be managed from a distance. Former Chairwoman Matz said that she couldn’t imagine doing the job effectively if she wasn’t in the office interacting with staff, attorneys and other regulators at other financial agencies on a daily basis. Fortunately, this cutting edge technology called the computer and telephone have not progressed to the point where people manage just fine interacting with each other over great distances without actually being in the same room. Telecommuting is the wave of the future. In fact, my guess is that if McWatters was a female democratic appointee of a Clinton administration, the slant of this article would have been how a modern parent is using technology to balance both work and life responsibilities.

The Post is a great paper but unless they have tangible proof that McWatters’ arrangement is negatively impacting NCUA and the public it safeguards, this article is much ado about nothing and a bit of a cheap shot.

May 21, 2018 at 8:37 am Leave a comment

Will Facebook make your members more secure?

fbThis article in today’s American Banker tipped me off to an announcement by Facebook that it is offering members the ability to use and register physical tokens as an added feature to guard against account hacking. Although I am proudly not one of the estimated 1 billion users out there who delude themselves into thinking that they have scores of friends who want updates on little Johnny’s latest achievements and a picture of the gourmet meal that they are making for dinner, I have to concede that the American Banker has a point, when it quotes banking officials who suggest that Facebook’s announcement will probably have members asking their financial institutions to offer them the same type of protection.

A press release posted on Facebook yesterday explains that “Starting today, you can register a physical security key to your account so that the next time you log in after enabling login approvals, you’ll simply tap a small hardware device that goes in the USB drive of your computer. Security keys can be purchased through companies like Yubico, and the keys support the open Universal 2nd Factor (U2F) standard hosted by the FIDO Alliance.”

What confuses me a tad about the announcement is that it is only going to be beneficial for us old-timers who still do our banking online with a laptop or desktop that has a USB port. Even though Facebook started as a means for kids at Harvard to know where the next party was going to be, fifty percent of Facebook users are over the age of 40, which explains why I know so much more about my friends and neighbors than I really need to. My wife is a Facebook fan.

McWatters Named Acting NCUA Chairman

 The inimitable J. Mark McWatters completed his unlikely lies from board gadfly to leader of the NCUA yesterday when he was named Acting Chairman of the NCUA Board, by President Donald Trump. Here are a few quick thoughts.

This is good news for credit unions, leaving aside his seemingly compulsive need to reference the fact that he is a lawyer at least once every five minutes, McWatters’ legal acumen has been a welcomed change for the industry.

  • He has advocated for taking a fresh look at issues ranging from MBL’s to Field of Membership flexibility.
  • It may have been totally by accident, but NCUA has actually positioned itself well ahead of the Trump wave by already having McWatters on the Board. McWatters joined by Metzger, have been advocating for substantial regulatory relief for almost two years now. As a spokesman for the Board McWatters can only help build bridges to Congressional Republicans.
  • Under NCUA’s enabling statue lets the President pick the Chairman of the NCUA Board: What a concept. This commonsense measure provides another example of why CFPB supporters are so wrong in their dogmatic instance that the bureau can only function with a single benign dictator.

On that note, enjoy your weekend without football. I will have to remember what I used to do on Sunday afternoons.

January 27, 2017 at 8:40 am Leave a comment

NCUA To Hit Regulatory Pause Button

President Obama may have named Rick Metsger Chairman of NCUA’s Board(  but Board member J. Mark McWatters  has  served notice that he is ready willing and able to play a decisive role in blocking regulations as long as he remains with NCUA.

The transition to a two member board provides the NCUA an opportunity “to avoid heavy handedness” and tailor rules to outliers  he explained in a column explaining his  in NCUA’s May newsletter. (  In  other venues he has been even blunter,  explaining in a speech before the National Association of Credit Union Service Organizations  that Matz’s departure presents an opportunity to hit the ” pause button” on new regulations.  At the same time,  McWatters has indicated an interest in instituting an 18 month exam cycle.  Chairman Metsger has also consistently demonstrated an interest in  mandate relief.  The exam cycle might be an area of common ground.

Much of this comes as welcomed news to credit unions, even if the truly onerous regulations are coming from the CFPB these days.  But remember, there are some things that credit unions want done.  For example, NCUA still hasn’t finalized regulations making fields of membership for federal credit unions more flexible.    And the guidance to accompany NCUA’s new MBL framework is something the industry will need time to understand and implement.

Remember too that this regulatory hiatus may continue for quite some time. We are in an election year and I don’t see anyone in a rush to replace Matz .This means that  if and when McWatters gets to move over to  the Export-Import Bank Chairman Metsger could be a very lonely man.

What happens if there is something that really has to be done? Only the shadow knows

May 5, 2016 at 9:13 am Leave a comment

Say it Ain’t So: McWatters Slated to Leave NCUA Board

I knew it was too good to last.

Suddenly, in August of 2014,  the NCUA board included a real life,  unabashed  strict-constructionist lawyer and fierce advocate of credit union  flexibility.  Now he’s leaving to go irritate a whole new group of bureaucrats and credit unions are worse off for it.  Send In the clowns.

J. Mark McWatters, who has been an outspoken advocate of greater regulatory flexibility for credit unions since he joined the NCUA’s three member board in August of 2014 has been nominated by President Obama yesterday to serve on the Board of Directors of the recently reauthorized Export-Import Bank of the United States.

I will get over the fact that he is ditching the NCUA but it will take some time. Since his appointment he has not been afraid to ruffle some feathers,  He questioned NCUA’s legal authority to impose risk based capital requirements on Well Capitalized credit unions;  advocated for a more expansive interpretation of credit union MBL authority  and  for a more flexible approach to   MBL  enforcement;  and pointedly questioned  NCUA’s budget priorities.  Critics would argue that much of this would have been done without McWatters but it’s  hard to believe that these initiatives would have been pushed with quite so much gusto had he not been around.

The only person happier than McWatters this morning might be Chairman Matz. Arranged marriages are always dicey  and these two get along about as well as John and Lorena Bobbitt. In fairness to Matz,   McWatters is pathologically incapable of going more than five minutes without referencing the fact that he is a lawyer and,  at times,  seems more interested  in being a contrarian and listening to  himself speak  then in playing a constructive part of the policy process.  But no one is perfect. Fortunately,  McWatters is far from done.  His still has to be approved by the Senate and until he is he promises to stay actively involved with the NCUA.

Parenthetically, McWatters’  nomination is shrewd   insider baseball. Everyone in politics has a Godfather  who helps them along the way;  on paper McWatters’ Godfather is  Representative Jeb Hensarling (R-TX) ) who, as Chairman of the House Financial Services Committee,   was a leader of  the drive to kill the Export Import  Bank  which he considered a leading example of corporate welfare. McWatters served as counsel to the congressman  in 2009 and chose to be sworn in to his position on the NCUA Board in Jeb’s District office . It’s safe to say that, with McWaters on the bank’s Board,  he has a kindred soul  who will relish the opportunity to tweak the corporate lobbyists who seek the Bank’s support..


January 12, 2016 at 10:03 am 2 comments

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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