KYLE HAUPTMAN CONFIRMED BY THE US SENATE TO SERVE ON NCUA BOARD

The United States Senate confirmed Kyle Hauptman to serve on the NCUA Board today by a vote of 56-39.   Even though most Democrats voted against all of the post-election judges and regulatory agency board members that have been nominated by President Trump in an election year, a number of Democrats crossed the party line and voted to confirm Mr. Hauptman.

Hauptman got 50 votes from Republicans and 6 votes from Democrats.

This fact alone indicates that he has earned much respect during his years as a Senate staffer for Senator Tom Cotton (R-AR).   Hauptman was a key member of Senator Cotton’s staff working financial services industry issues.  The number of Democrats who served on the Senate Banking Committee while Hauptman was a staffer there and voted in favor of his nomination is a positive thing.

Hauptman seems to be able to work and gain respect across party lines.  This will serve him well as he joins a NCUA that will now have a Republican majority comprised of him and Rodney Hood – but almost certainly a Democrat Chairman Todd Harper holding the gavel shortly after the inauguration of President-elect Joe Biden on January 20, 2021.

As we indicated in our lengthy background Client Update yesterday, the ability to have a workable and successful NCUA administration as chairman will be a test for likely Chairman Todd Harper when President Biden designates him as chairman early in his term.

Going against Harper will be the necessity of him to compromise on many of his key initiatives to get the support of a board that will now have a two-vote Republican majority.  And, also not in his favor is the fact that his term expires in April 2021.  He will, therefore, be somewhat of a lame duck from the time he begins his chairmanship just four months or so before his term officially ends.

However, in his favor is the fact that Todd Harper has been on the Washington political scene for over twenty years.  He knows how to play the game and, even without a board majority, to use the levers of power available to him.

He will be official spokesperson for the agency, be responsible for managing the agency executive staff on behalf of the board and will largely have control of the NCUA Board agenda.

Also, because of the fact that there will be a GOP majority on the NCUA Board, it is quite possible that there will not be a long line of potential NCUA Chairman nominees interested in becoming the next Democrat Chairman working with a board from the other party.  Therefore, the possibility that Chairman Harper may serve as a holdover chairman on through 2021 and perhaps into 2022 is certainly a high one.

Anyone who believes Todd Harper will not be able to use the authorities available to him as NCUA Chairman would be selling him short.  He knows the political game and is well-connected in Washington circles.

What will be another real question is how the two Republicans that will now be serving on the NCUA Board along with likely Chairman Harper will use their majority to influence policy and agency direction – even though they do not control the agenda or agency staff.

All indications are that Hood and Hauptman are of like mind philosophically from a regulatory perspective.   While the two of them may not agree on every issue, they are much more likely to agree with each other than they are to agree with Chairman Harper who has a very activist regulatory bent.

Can Hood and Hauptman influence policy with their majority even with a chairman from the other party?  Will they be willing to utilize that majority, even though it may result in some messy public disagreements at NCUA Board meetings?

Chairman Hood has had a number of those type of board meetings over the past year when Board Members Harper and McWatters teamed up against him.  How will he respond now that he and Hauptman are the majority with another chairman?

It will be interesting to see.  As we have said before, compromise is going to be the name of the game if anything is to be accomplished at NCUA in 2021 and even 2022.

And to make effective compromise happen, all parties will have to be willing to utilize the power they have in order to create a willingness to compromise on the part of the other.  But, yet, they will have to use that power effectively enough, even if it means compromise, to bring about a solution to important issues that need to be found without stalemate.

Be watching the NCUA Board over recent months.  The December and likely the January board meetings will still have Chairman Hood at the helm.  Hauptman and Harper will be in place in the other two slots.

From February forward probably through at least the end of 2021, we will almost certainly have Chairman Harper and Board Members Hood and Hauptman in the two other board positions.

Three H’s.  Harper.  Hood.  Hauptman.

To keep the H alliteration going, how the three of them handle this new board dynamic will hold the attention of credit unions for months.

We will keep you abreast on what’s happening at NCUA and throughout the changeover to the Biden administration as it relates to the regulatory environment at the federal level.

Until next time.

Dennis Dollar