NCUA CHAIRMAN TODD HARPER WENT BEFORE THE SENATE BANKING COMMITTEE FOR HIS CONFIRMATION HEARING TODAY WITH NO FIREWORKS AND NO OPPOSITION – CONFIRMATION ALMOST CERTAIN  

The Senate Banking Committee held a hearing on Todd Harper’s renomination to serve an unprecedented second successive term on the NCUA Board today.  Despite the precedent that this renomination will set and its impact on the independence of the agency by allowing a presidential administration to renominate for successive terms the board members that follow its regulatory philosophy, there was only minimal questioning of Chairman Harper and no fireworks or stated opposition.

It appears almost certain that Todd Harper will be confirmed for a second successive term on the NCUA Board, will remain Chairman as long as there is a Democrat administration in the White House and will eventually become the longest serving NCUA Board Member in history – as well as the longest serving Chairman if President Biden is elected for a second term in 2024.

There was some thought that Republicans on the Senate Banking Committee might raise the question of the unprecedented nature of this renomination and the aforementioned impact on the independence of NCUA as an agency.  This did not occur.

Other than some perfunctory questions about Chairman Harper’s position on climate change and why that is a pertinent issue for a NCUA Chairman’s priority list, he got by without anyone laying a glove on him.

The hearing’s lack of controversy is a sign of both Chairman Harper’s political skills to get the White House on board with a creative interpretation of what constitutes an “unexpired term” so that he could legally be renominated and also of the relatively minor status of NCUA as a federal agency that was just not high profile enough for senators to raise any questions.

Because a staffer from a leading Republican senator on the Banking Committee reached out to me directly as a former NCUA Chairman to get an understanding of the issue of how NCUA Board terms are structured, what the precedent has been on the issue of incumbent board members being renominated and the possible impact on the independence of the agency, it is quite certain that the matter of whether this renomination is illegal or merely unprecedented – but still technically legal – came up behind the scenes before the committee hearing.

An argument could be made either way, as it was with the White House’s interpretation when President Biden renominated Mr. Harper.  It just depends upon how badly a senator wanted to make an issue of it.

Apparently, no one cared enough or considered it important enough of an issue at a relatively low-profile federal agency like NCUA to raise the issue publicly.

Therefore, Chairman Harper is going to be wielding the gavel at NCUA for at least three more years – and maybe more if the President is re-elected.

The concern about independence of the agency is based upon the likelihood that, with this precedent of renomination being established, every NCUA Board Member will begin campaigning for his or her renomination with the sitting administration the closer it comes to the end of the term.  Playing to the favor of the administration that might renominate a Board Member and a Senate that might reconfirm him or her would begin to shift the policy decisions of a NCUA Board Member away from what might be best policy and move that decision making toward what might be most popular with the White House that could renominate me.

As I have stated before, I have known Todd Harper for almost 25 years.  He is a lifelong Washington political player with considerable contacts and influence on the Democrat side of the aisle – both in Congress and at the White House when the Democrats are in control.

He has strong political chops.  And this renomination and almost certain confirmation, following his successful hearing today, is further evidence of that fact.

Whether you agree with Chairman Harper’s direction for NCUA and the credit union industry or not, it is now reality that he’s going to be the guy for the foreseeable future.

The only unanswered question is whether the two Republicans on the NCUA Board, Rodney Hood and Kyle Hauptman, are willing to use their two-vote majority to provide a counterbalance to Chairman Harper’s approach when they disagree on policy.

Hood and Hauptman, as we discussed in last week’s Client Update, have flexed their muscle to put three items (the CUSO rule, the service facility rule and the mortgage servicing rule) on the NCUA agenda over Chairman Harper’s objections for the next three NCUA Board meetings.

Still, those rules have not been voted upon and finalized.  Will a newly confirmed Chairman Harper be able to out-maneuver his two colleagues on these three issues and thwart their approval?

Will Hood and Hauptman stick together on all three issues and truly roll the chairman?  Or will one of them pull back in the name of board unity?

This remains to be seen.  And it will be fascinating to watch.  The three issues that Hood and Hauptman put on the agenda over Chairman Harper’s opposition are important final rules for credit unions.  They should actually be unanimous votes and probably would if they had not been originally proposed during the Hood chairmanship and the Trump administration.

But politics being what it is, Chairman Harper does not want to see a final rule come from any Chairman Hood proposal if he can help it.

Being reconfirmed as Chairman will strengthen Harper’s position.  How Hood and Hauptman respond will be truly interesting to watch and, quite frankly, determinative of where the NCUA Board heads in the next two years until Mr. Hood’s term expires.

Of course, with the precedent that will be established as Chairman Harper is renominated and reconfirmed for successive terms, Mr. Hood will be subject to renomination himself in 2023.  While that will not happen under President Biden, he could conceivably stay until 2025 as a holdover if the Republicans take back control of the Senate in the 2022 elections and stop another Democrat from being put on the Board.

Then, if a Republican is elected president in 2024, Hood – and even Hauptman – could be renominated and reconfirmed since neither got a full six years of the original term to which they were nominated and confirmed.

Precedent matters.  Politics matter.  Elections matter.

The NCUA Board, while perhaps not important enough for senators to get their hands messy in a confirmation fight, is still important to credit unions.

And the politics of the NCUA Board is going to be something worth watching, and certainly something impactful on credit union industry regulatory policy, over the months and years to come.

But, as of today and Chairman Harper’s hearing, prepare to send him a congratulatory note upon his almost certain confirmation in the next month or so.  He cleared a big hurdle with the Banking Committee today.

Until next time.

Dennis Dollar