CU 2.0 Podcast Episode 354 Lobbyist Elizabeth Ergubian on NCUA's Future, Quo Vadis

Send us a text

Buckle up, there may be turbulence on this ride.

On the show today is Elizabeth Eurgubian , now a lobbyist in Washington DC but who just a few months ago served as NCUA Director of the Office of External Affairs and Communications and Policy Advisor to Chairman Harper.  That’s an important position at NCUA - it’s a political appointment.

Before that  she was deputy chief advocacy officer at CUNA and before that she was a vice president and a lobbyist for ICBA.

She knows Washington DC and she especially knows the lobbying intricacies involving credit unions and community banks.

This episode was recorded the day before NCUA chairman Kyle Haputman revealed the staff reorganization plan for NCUA which is a slightly deeper staffing cut than Eugubian predicted but that makes her predictions for NCUA operations with a smaller staff even more chilling.

Bottomline: she says everything will take longer at a slimmed down NCUA, an agency she says was thinly staffed before this 20+ percent staffing cut.

Along the way Ergubian gives a short course on how to lobby effectively and offers insights into the likely future of NCUA (will it stay independent?), the credit union federal tax exemption, and credit union examinations in a slimmed down NCUA.

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email [e-mail]
 
 

And like this podcast on whatever service you use to stream it. That matters.
 
 

Find out more about CU2.0 and the digital transformation of credit unions here. It's a journey every credit union needs to take. Pronto

Episode Transcript

SPEAKER_03 (00:00):
Welcome to the CU2.0 podcast.

SPEAKER_00 (00:05):
Hi, and welcome to the CU2.0 podcast with big new
ideas about credit unions andconversations about innovative
technology with credit union andfintech leaders.
This podcast is brought to youby Quillo, the real-time loan
syndication network for creditunions, and by your host,
longtime credit union andfinancial technology journalist,

(00:27):
Robert McGarvey.
And now...
The CU 2.0 Podcast with RobertMcGarvey.

SPEAKER_03 (00:35):
Buckle up.
There just may be turbulence onthis ride.
On the show today is ElizabethErgubian, now a lobbyist in
Washington, D.C., but who just afew months ago served as NCUA's
Director of the Office ofExternal Affairs and
Communications and PolicyAdvisor to Chairman Harper.
That's an important position atNCUA.

(00:55):
It's a political appointment.
Before that, she was deputychief advocacy officer at CUNA.
And before that, she was a vicepresident and a lobbyist for
ICBA.
She knows Washington, D.C., andshe especially knows the
lobbying intricacies involvingcredit unions and community
banks.
This episode was recorded theday before NCUA Chairman Kyle

(01:18):
Hauptman revealed the staffreorganization for NCUA, which
is a slightly deeper staffingcut than Urgubian predicted.
But that makes her predictionsfor NCUA operations with an even
smaller staff more chilling.
Bottom line, she says everythingwill take longer at a
slimmed-down NCUA.
An agency, she says, was thinlystaffed before this 20%

(01:41):
staffing.
Along the way, Argubian gives ashort course on how to lobby
effectively and offers insightsinto the likely future of NCUA.
Will it stay independent?
She sure hopes so.
Also, the credit union federaltax exemption and credit union
examinations and a slimmed downNCUA.

(02:02):
Listen up.
You bring an unusual resume tothe table.

SPEAKER_01 (02:08):
Yes, yes.
I always like to share theexperience because it is kind of
unique.

SPEAKER_03 (02:15):
What makes your resume even more unique is that
you worked for the Antichristbefore you went over to work for
CUNA.

SPEAKER_01 (02:21):
There's a lot of comparisons I have with that as
well.
I started my career at theFederal Reserve Board.
working in banking law.
And the division I worked withat there was the Consumer
Financial Protection Office thatoversaw pretty much all the
consumer financial protectionregulations in the U.S.

(02:44):
or the vast majority of them.
This is at the Federal Reserve.
That office eventually, and theoffice had like 15 attorneys.
That office eventually was whatbecame the CFPB.
So the CFPB, that tells you thedegree of difference between
what the CFPB was versus whatwas prior to Dodd-Frank.
It was just a 15-person officeat the Fed.

(03:04):
That then became a whole agency.
But I started my career at thatoffice and worked there for four
and a half or so years.
I wanted to get some industryexperience because I thought,
you know, I'm only seeing oneside of the story.
I got to know what's happeningon the other side too, to really
be thorough in my career.

(03:26):
And so I worked in-house atSally Mae, a student lending
company, and I worked for themas well as their bank.
They had a bank that serviced alot of their loans.
So I was a counsel attorney forboth the Sally Mae in terms of
all their private studentlending products.
And also I worked for the bankas well.

(03:47):
And I did that for a couple ofyears.
And one of the things I lovedabout Sallie Mae in that
position was some of theadvocacy work I did.
I actually went and lobbied theFed on a few issues dealing with
student lending regulations.
And I thought, this is kind ofthe fun stuff.
I really like this.
I'd like to do more of this inmy career, the advocacy side.
And so I left Sally Mae, whichworked for the Independent

(04:10):
Community Bankers of America.
They were looking for aregulatory attorney, one that
could help on consumer financialprotection issues, which was
what I was trained in, and alsowork on compliance as well as
advocacy.
So I left and went there forseveral years, and that was
during the time of the financialcrisis, Dodd-Frank.
So I was very involved in a lotof those regulatory issues,

(04:34):
extremely involved.
So that brings me to my point.
And I always tell credit unionsthis.
When things are going bad interms of– and you can even get a
little bit political and say–you know, the Democrats are in
power, you know, and at thatpoint, and I'm not, I'm
apolitical.
I'm a lobbyist, an attorney.
You, you, you, everybody's yourfriend when you're in a lobbyist

(04:55):
in DC.
So I'm not taking sides here,but typically if you're in the
industry, you have a Democratpresident, you have a Democrat
Congress, both houses, andyou're, you're following the,
one of the worst financialcrises in U S history and,
That's not a good time to be inthe industry in terms of what

(05:16):
regulatory changes are going tooccur.
You got to fight for tailoredregulatory changes because you
don't want regulations that arereally meant for the larger
institutions to impact thesmaller ones like community
banks and credit unions so thatthey are out of the market.
They can't compete anymore.
And that was a big issue duringthat time.

(05:37):
So.
At that time, and when you havea political situation like that,
the banks like to be friendswith the credit unions.
They really do.
They want credit unions on theirside in that.
They want to be standing next tothem when they go into a
member's office or a regulator'soffice.
See, look, I'm next to thecredit union.
See, we're buddies.
We're on the same side here.

(05:57):
Because the credit unions givebanks credibility in arguing for
fewer regulatory changes.
So when I worked at ICB, I didwork closely with with NAFQ and
CUNA on a variety of regulatoryissues that would be problematic
for smaller community-basedfinancial institutions.
And at that time it wasparticularly the mortgage rules.
There were a lot of reallycomprehensive mortgage

(06:20):
regulations because that was theissue with the financial crisis.
And we all had to be at acoalition and we all had to work
together because this was gonnabe real heavy stuff.
And it was mostly thecommunity-based institutions
that were working closelytogether.
And then the larger banks,Eventually, you know, their
lobbies eventually, you know,went off on their own because

(06:41):
they realized, well, these rulesaren't going to be great for us,
but they're going to be worsefor our competition, which is
the smaller institutions.
So we'd rather have them.
So we really had to worktogether.
So that gets to the point thatwhen you have a political
situation like that, the banksand the credit units could be
BFFs.
And if you're working for acommunity bank lobby, you really
want the credit unions with you.

(07:02):
You want to say, oh, look, see,we're together because that
gives your argument credibility.
Now, fast forward, and if thatchanges to a political
environment, maybe like now,that's when you're going to see
maybe more attacks on the creditunion industry by the banking
industry, particularly communitybanks, because they don't need
them anymore.
So I knew credit union lobbyistsbecause of that.

(07:26):
because of my work at ICBA.
And I also knew some folks overat CUNA at the time.
They were going through somechanges.
They had a new CEO, Jim Nussel.
They had done some restructuringand they wanted to have a
different approach to theirregulatory office.
And they approached me and Itook the position there to lead
the regulatory advocacydepartment there.

(07:47):
And that's how I ended up goingthere.
It

SPEAKER_03 (07:51):
all makes sense to me because I thought for a long
time that Community banks havemuch more in common with credit
unions than they do with the bigbanks.
Yes.
Chase could give a hoot abouteither of them.
They're not relevant.
Chase doesn't think about themat any moment during the course
of a day.
The enemy for both credit unionsand community banks are the big

(08:13):
banks and the fintechs.
It's pretty simple.

SPEAKER_01 (08:16):
That's correct.
And at that time, like I said,the mortgage regulations.
Now, what ended up becoming...
regulatory changes by the CFPB,they weren't great, but they
could have been so much worsefor the industry, especially
community-based financialinstitutions.
And we were all sort of in acoalition working together,

(08:38):
including with the large banklobby.
And eventually toward the end,as we were getting closer to
getting some changes made, thenthey're not returning our phone
calls.
and they're not returning myemails for meetings and whatnot.
I'm thinking, well, gee, we hadthis great coalition going on,
and now the big bank lobbyisn't, you know, they're sort of

(08:58):
ghosting me, you know?
And that's why, because therewas a realization that, okay,
you know, some of theseprovisions are going to be
really problematic for our largebanks, but they're going to be
worse for these otherinstitutions.
And maybe that's a good thing.
So we really had to fight it onour own.
And like I said, the pain thatcould have been felt at that

(09:21):
time is far, you know, it endedup being far less than what it
could have been.
And that's something to notebecause there's a lot of
lobbying that goes on behind thescenes that you don't see.
You don't see it on LinkedIn.
You don't see it, you know,highlighted with a grip and grin
picture, but it's happening.
And that's the most significantlobbying, the stuff that you

(09:44):
don't see.

SPEAKER_03 (09:45):
Years ago, I worked for a very big Washington, D.C.
trade association.
I was not a lobbyist, but I knewlobbyists.
And those guys worked five daysa week, not just when
legislation was beingconsidered.
And they had hellacious,hellacious restaurant and bar
bills.

SPEAKER_01 (10:02):
See, they're not like me.
I'm cheap.
I like to go to Five Guys.
If I have a meeting, I'm like,we're meeting at Five Guys.
I just want

SPEAKER_03 (10:10):
a burger.
This industry was probably moreappropriate that the expensive
steakhouses were always a goodidea.

SPEAKER_01 (10:16):
Yeah.
See, credit union lobbyists,we're a little on the cheaper
side.
But no, I get what you mean.
Yeah.
You know, especially in theolder days, it was a lot more
about the wedding and dining andthat sort of thing.
And then eventually it evolvedto where that was not.
going to be the way to lobbyanymore.
And you had to be more creative.
And also, you know, you'reworking for a trade association.

(10:37):
Sometimes you don't have thefunds to have that kind of
access.
You have to go into otherroutes.
And of course, there werecampaign finance rules as well
that changed things.
So lobbying has definitelyevolved into a different type of
position now.

SPEAKER_03 (10:52):
The one thing that's consistent, I think, is that
back then what these guys weretrying to do is build
relationships with people.
And at that moment in time, theythought the easiest way to build
relationships was over a martinior over a steak.

SPEAKER_02 (11:08):
Yep.

SPEAKER_03 (11:09):
Even today, though, the key thing is building
relationships.
You can't just go knock on amember's door or a senior staff
person saying, I got to talk toyou about this tax exemption
thing.
He's going to say, who the hellare you?
Why are you here?
Yeah.
You've been knocking on hisdoor, taking him out for coffee
at Starbucks for six months orsix years.

(11:30):
He'll talk to you for a fewminutes.

SPEAKER_01 (11:32):
That is a great point.
I didn't tell you where I'mworking now.
I'm at Atlas Advocacy now.
I'm a partner, and this is agovernment relations firm.
We do lobbying for all differententities, including financial
services, credit unions,whatnot, credit union trade
associations.
That's what I do now afterleaving the NCUA, but you raise
a very good point in that How isaccess achieved now?

(11:54):
And I will tell clients, and Idon't think they always get it.
I say, look, I live a mile fromthe Capitol building and I don't
think people understand.
I have for the last 18 years,same house.
I don't think people realizewhat that entails.
I don't almost have to try a lotof times to have access.
I just exist and I have access.

(12:16):
I go to pick up my kids atschool.
The family that carpools withme, They work for an agency I
lobby.
You know, there's all of thesetypes of relationships that
happen when you live in thecommunity with which you work
that just happen organicallywithout you even attempting,
without you putting a lot ofeffort in.
So that is a serious advantage,whether you go with whatever

(12:38):
firm that someone hires, to havesomeone that's that local, not
in the suburbs.
I mean, you are right there.
We can bring members of Congressto our home for a cocktail after
work, which we've done before,because we're right here and
you're in a nice home to chat.
out for a little while.
We're able to do that.
And we do do things like that.
That is extremely, extremelyvaluable.

(13:01):
And it's effortless.
It doesn't take any time orstrategic thinking or anything.
It just can happen organically.
It's very helpful to becentrally located in DC.
I guess that's what I'm saying.
But to your other point, don'tgo to a member or regulator when
you need something.
And so many people will do that.
Like, well, we need this.

(13:22):
So let's go ask this member forthis.
OK, you should have been havingthat relationship before you go
with the ask, because if you'reonly going with the ask, you
want to establish thoserelationships ahead of time
before you have to make the ask.
So now you have therelationship.
It's kind of like in TheGodfather, that first scene.

(13:42):
Where the one individual goes tothe godfather.
I don't know if you've seenthis.
I'm guessing you have.
Yeah,

SPEAKER_03 (13:47):
right, right.
You know, he's like a funeralparlor.

SPEAKER_01 (13:50):
Right.
And he's coming in and saying, Ineed you to help me with this.
He's like, you're how come I'monly seeing you now?
Like my wife is your son'sgodmother or whatever you how
come you don't visit?
Like, how come I'm only seeingyou when you need something?
And it's a little bit like thatwith anything, with regulators,
with members of Congress, withwhomever you're working with,
other trade associations.

(14:10):
You want to establish thoserelationships early on and have
a foundation.
So when you do have that ask,you have that capital, you have
that relationship alreadyestablished.

SPEAKER_03 (14:21):
I totally agree.
It's also why I'm a long-timeskeptic of QNSGAC and walking
the hill.
Because if I'm sitting here andI said, who the hell are you?
I mean, it's never seen youbefore.
Why are you knocking on my door?
But

SPEAKER_01 (14:39):
yeah, yeah, you have to the meeting.
And let's say you are going infor a first time.
You got to know that's theappetizer.
That's not the fullrelationship.
If you're going into a meetingto meet a member for the first
time or a regulator for thefirst time on an issue to
establish that relationship, youestablish it, you say what your
issues are, but no, that's notthe end of the story.

(15:01):
You're not done.
You're not like, oh, I met withthe member.
Okay, I guess I did my lobbying.
No, there's follow-up.
That relationship has to bemaintained through follow-up,
through offering yourself as aresource, helping them do their
job better so they may help youon another occasion.
That's all extremely important.
And it gets to the point youmade that lobbyists lobby every

(15:24):
day of the week.
They're not off when everybodyelse is off.
They are always working.
Even in times that are down,you're not saying, oh, there's
no big bills happening.
I'm going to take a break and goto Vegas for a while.
No, you're like, okay, how can Iuse this time to build my
foundation for when I am goingto need something?
Because it's always going tohappen.
That day is always going tocome.

(15:45):
So you're either cashing in oryou're building the foundation.
You're using the time to eitherbuild or cash in.

SPEAKER_03 (15:53):
I know he's now retired, but a successful
lobbyist who had one skill.
He was a pretty good golfer.

SPEAKER_02 (16:05):
Golf is long.
It's a long game.

SPEAKER_03 (16:07):
There were a couple members that various clients
wanted to get some messagesacross to.
And golf takes about four hoursfor 18 holes.
Yeah.
And he would go out and havefour hours playing with a member
in a foursome.
There'd be two other people inthere.
And he wouldn't spend all fourhours talking about his issue.

(16:29):
Of course not.
But it would be raised in thecourse of the game.
And the member would listen tohim.
Exactly.
Switch gears, NCUA.
What the heck is happeningthere?
I have a feeling that...
I'm sitting in Langley at theCIA trying to figure out what's
going on in Tehran.

(16:49):
And the truth is, I have noclue.
No clue.
People tell me, oh, I think thisis going on at NCUA.
And I have no clue.
I don't think they have a clueeither.

SPEAKER_01 (17:00):
Yes, I mean, I would agree with that.
I'll give you a little contexthere too, so that you could kind
of understand my viewpointsabout it.
So I told you how I got to CUNAand I worked there for several
years and I was approached, Iwas obviously always lobbying
the NCUA.
I lobbied Todd Harper all thetime, Chairman Hood, all of

(17:23):
these individuals I was speakingwith regularly and had regular
meetings with.
We didn't always do like a gripand grin link post, because like
I said, some of your mostvaluable meetings are the ones
that aren't you know, advertise.
Sometimes regulators don't likethat.
They don't want you tonecessarily do that.
So they show who everyonethey're meeting with constantly.

(17:45):
Sometimes you do have thesephone calls that occur and
interactions that occur that arenot highlighted.
And I say that because I wantfolks, you know, in the industry
to really understand that.
I think some people look atLinkedIn and say, oh, look at
these grip and grins.
Look at this person at the WhiteHouse.
Oh, that means they have accessbecause there's a grip and grin
at the White House.
That's not what that means.

(18:06):
It's nice.
It's a pretty picture.
But let me tell you, the mostsignificant meetings are the
ones that aren't going to havethe grip and grit.
That's just FYI.
So that's just my way ofeducating folks on that.
But let me get to the point.
I had frequent conversationswith folks there because I was a
lobbyist and that's what I did.
And again, I used myself as aresource.

(18:27):
I wasn't just asking.
I was also, if I knew of anyinformation, I might share that
with them.
If I heard something that mightbe helpful to those efforts, I
might share that with them.
Because you want thisrelationship to be give and
take, not just asking for stuffand waiting to get it.
They approached me into theBiden administration, the first

(18:47):
year into the Bidenadministration, about taking
over as Director of Office ofExternal Affairs and
Communications.
That is The only directorposition at the NCUA, that's a
political appointment, meaningit's not a career job.
You're appointed by theadministration and whoever's
chairman, only report to thechairman, not the rest of the

(19:07):
board.
And you could be dismissed atany time for any reason.
It's a Schedule C position.
You have to go through a wholeprocess to get the job.
And you're not a careeremployee.
When the president changes orthe chair changes, usually
you're out as well.
So I was very interested in theposition.
I always thought, you know, ifthere's any job at the NCUA I

(19:29):
would love to have, it was thatone.
That was the one position Ithought was different for me,
but would really...
helped me grow as an individualand in my career, but I figured
no one would ever consider mefor it.
Well, when they reached out, Ithought, oh my gosh, I can't
believe it.
Yes, I'm interested.
Well, the Biden administration,was not interested in me.

(19:50):
And this was because I was alobbyist and they didn't want
lobbyists who lobby an agencythen going and working for the
agency that they were justlobbying.
They didn't like this kind ofrevolving door and they actually
had an executive order againstthose types of hires.
So when we approached the Bidenadministration to ask for an

(20:10):
exception, to ask for a waiver,they said no.
they were granting a couplewaivers at that time, but very,
very few.
And they were only in like forlabor, labor employees, folks in
the labor union world, not foranybody else.
So they said no.
So like any lobbyist rule,number one of being a lobbyist
is don't take no for an answer.

(20:31):
Right.
So we said, okay, we wait.
You know, I thought, you know,if you're willing to wait, why
don't you ask again in likeanother month or two?
And that's what, the chairman'soffice did.
Eventually, after a few months,the administration said, okay,
we will grant a waiver for me totake this position.
I think I was like number 16.
They only granted maybe a coupledozen waivers of all Schedule C

(20:54):
employees.
And so credit unions got one,and that was myself.
So that's why I started at theNCUA in in year two of the Biden
administration.
I served three years there, notthe full four.
And then once the presidentchanges over, which happened,
then I'm out.
I stayed for the transition fora few weeks as Chairman Hauptman

(21:16):
transitioned into the positionand then left and went to Atlas
Advocacy after that.
And I always knew that was, youknow, this is how it works.
This is the job.
You don't take the job unlessyou really understand this.
But that gets to my point.
I knew that this was how itworks.
I took the job knowing there's avery high likelihood I'm only
going to be here for threeyears.

(21:37):
In fact, there's probably like a99% chance I'm only going to be
here for this amount of time.
There's going to be an end.
I need to do everything that Iwant to get done and the impact
that I want made in that amountof time.
I had that situation and thedeputy who worked with me at
OEAC had that situation.
Nobody else at NCUA was in thatposition.

(21:58):
It was just the two of us.
And of course, now neither oneof us are there.
Everybody else who works atNCUA, if you're not with the
board office, you're a civilservant.
You're not a Schedule C.
You're a civil servant employee.
So it's kind of interesting asfolks, the day after the
election, many people werecoming by my office.
They felt very bad.

(22:19):
They know that I'm going to behaving to leave.
And And I'm thinking to myself,it might not just be me.
Because I know if theadministration comes in and
makes some changes, it could beother people leaving too.
There could be a shift in howthings are done.
I don't think folks at theagency thought that.
So to have to now face therifts...

(22:41):
And the early retirements andthe buyouts and all of what's
happening now, I could imagineis incredibly stressful for the
individuals that are there.
So you have two groups, you havethose that leave and they leave
and they go off to do whatever,get another job or just retire,
take early retirement.
But then you have the folks thatstay and the ones that stay then

(23:04):
have to take on the workloadthat the others left behind and
they have to take on the anxietyof of how long do I have here?
And should I be thinking aboutleaving and all these things?
And that type of anxiety doesn'twork with people that take jobs
at the NCUA.
I mean, you take a job at anagency like the NCUA because you

(23:25):
don't want that kind of anxietybecause you want a job that'll
pay you well, it's stable.
You're going to have it for along time.
You're going to do your jobevery day.
You're going to go home.
Eventually, you serve enoughtime.
You get a nice pension,retirement, health care.
You move on.
You like that level ofstability.
If you're someone that wants towork in a crazy environment

(23:47):
that's like a startup, you'renot going to go work at the
NCUA.
So now you have an environmentthat's like that for people who
aren't really accustomed to thatkind of energy.
So I could imagine...
it is really difficult for a lotof folks there.
And when there's difficultyemotionally, you don't do your

(24:07):
job as well.
And so that's a concern that Ihave personally.

SPEAKER_03 (24:11):
The anxiety had to ratchet up when two of the board
members were dismissed.

SPEAKER_01 (24:18):
Exactly.
And

SPEAKER_03 (24:20):
questionable legality of dismissal, but the
reality is, for now, they'vebeen dismissed.
And that...
didn't seem to be something thatwas going to happen and yet it
did

SPEAKER_01 (24:32):
absolutely that that is another thing so you now see
the folks at the top you can'timagine anything like this
happening to them and that'shappened to them that is going
to absolutely just add on to thethis is the already existing
tsunami of anxiety that you'reexperiencing.

(24:54):
Like, like I said, it's allabout expectation.
I expected this was going tohappen to me, or it was a high
possibility.
So when it did, I was like,okay, this, I knew this was,
that

SPEAKER_03 (25:05):
was built, built into your job.
If you're appointed secretary ofdefense and your president
loses, you're out, man.
It's one in a thousandappointments or a hundred.
Do I know of cases where theexecutive branch says, no, no,
come on, you can stay with us.
Right.

SPEAKER_01 (25:25):
Yeah.
So you know that going in, whenyou don't, it's almost like the
expectation, if you expect thatthe reality isn't so bad.
It's when you don't expect itand you have the same reality.
And that's the

SPEAKER_03 (25:40):
reality of Washington, D.C.
employment today, I think.

SPEAKER_01 (25:44):
Absolutely.
Everywhere.

SPEAKER_03 (25:45):
Everything that you thought was certain.
And you were pretty much right.
Not you, but this namelessindividual federal employee.
Now you have to look and say,you know, the floor is shifting
under my feet.
You know, it's it's used to beconcrete.
Now it seems to be likequicksand or something is weird.

SPEAKER_01 (26:04):
That goes to a good point, too, because I like I
said, I live here.
All my neighbors are federalemployees.
A lot of them are federalemployees and they're they're
dealing with some of theseissues.
So we talk about it all thetime.
Another concern I have about itis, you know, the younger
generations watch their parents.
They watch and they watch.
adults and see what happens tothem.
They live like that.
And the government job hasalways been one of the

(26:27):
highlights of it.
One of the things that makes itmarketable is that level of
stability.
Well, that piece is not thereanymore.
And anyone watching andexperiencing today's world will
never feel that way about thefederal government again.

SPEAKER_03 (26:41):
Exactly.
The attraction.
Again, I worked in the privatesector in DC.
I never really had much interestin working for the federal
government.
But the people who did, We'reattracted by the stability and
good benefits.
And in most cases, the workloadwasn't that intense.
For some employees, they wantedtheir kids working for EPA,

(27:03):
wanted intense in that period oftime.
But for the most part, I'm notsaying people are lazy.
Please don't misunderstand.
But you're not saying, oh, man,I live to work 18-hour days.
I love it.
Can I have an extra project,please?
That's not the person we'reattracted to working in

(27:23):
Washington, D.C.
for the federal government.

SPEAKER_01 (27:26):
Right.
And one thing, too, that's worthnoting, because we're talking
about what it's like at the NCUAnow, another distinction, I
would say, and I worked for theFederal Reserve as well, so I
could kind of compare andcontrast a little bit.
One thing that I thought was alittle unique about the NCUA is
it was already very thinlystaffed.

SPEAKER_02 (27:43):
Oh, really?
Yeah.

SPEAKER_01 (27:44):
Very much so.
And that's something that a lotof individuals in the industry,
I don't think, understand.

(28:14):
FFIEC, which is a group of allthe prudential regulators to
make sure that our examinationprocedures are consistent and
they work together on CRA.
Of course, NCUA doesn'tparticipate in those working
groups, but HMDA, those types ofthings.
And I did a lot of interagencywork when I was at the Federal

(28:35):
Reserve.
So that's how I knew who theNCUA was.
I was pretty familiar with theagency.
There's a ton of differentworking groups.
It's the government.
So there's a working group foreverything.
There's probably a working groupfor what the holiday party is
going to be that year.
There's a working group foreverything.
And you always had, like I wason a working group, I was on a
couple different ones.
There were a dozen staff membersat the Fed that were on these

(28:59):
various working groups.
The NCUA, same staff member onevery working group.
Same person they said everysingle time.
And I thought to myself, what isyour portfolio like over there?
And that was kind of a joke.
You know, the NCUA was verythinly staffed, and it looked
like that to the other agencies,and it really impacted their

(29:21):
credibility as a player at thetable.
And I always remember that, andeveryone felt like that.
And then when I went to theagency and experienced it from
the inside, it was worse than Ieven thought.
Like everyone's portfolios weregigantic.
You would have people working onso many issues that, you know,

(29:41):
maybe 10 issues at the Fed, itwould be one or two that you
have now 10 at someone at theNCUA working on.
I never felt overworked at theFederal Reserve.
Never.
I mean, there were times we haddeadlines.
There were times during thefinancial crisis, they were
probably all extremelyoverworked, but those are
anomalies.

(30:01):
Those are environmentalsituations that don't happen
every day.
But yeah, during that time,everyone was working crazy
hours.
I guarantee it.
At the NCUA, people worked alot.
They worked a lot of hoursbecause they were so thinly
staffed and so thinly resourced.
And You just had to.
So I felt like the workload wasfar greater for individuals at

(30:24):
NCUA than it was when I was atthe Federal Reserve.

SPEAKER_03 (30:26):
Now, has Hauptmann, has anybody given an indication
of further staff reductions atNCUA?

SPEAKER_01 (30:32):
Yes.
So I know they're cuttingsignificantly, a lot of buyouts
happening.
And then there's riftshappening.
I know people...
Personally, I know people thathave been told you're no longer
going to be here anymore.
So they are significantlycutting.
I mean, it'll be under, I'mguessing under a thousand
employees.
I think it was around 12, over1200 when I was there.

(30:55):
My office, Office of ExternalAffairs and Communications, we
had about 14 individuals there.
I can't imagine.
It'll probably be half that.
And we had a huge portfolio.
Like every single person in myoffice was overworked.
And

SPEAKER_03 (31:09):
I'll give you- impact the workload?
I mean, the question is when thefirst tech DCU merger goes
through regulators for approval,do they have the staff to
adequately look at thispaperwork?

SPEAKER_01 (31:24):
It's everything's going to be slowed down because
not only do you have fewerpeople, right?
You have to take those who'sgoing to do their work.
Elves aren't going to do thework.
Somebody has to come in and takeover what that workload was.
Everybody had a workload atNCUA.
There was no one floating.
Everyone had a workload.
So someone has to take thatover.

(31:44):
Plus, you have the emotionalturmoil of what you're facing.
That's going to slow you downwhether you like it or whether
anybody likes it or not.
Being in a situation that'sstressful slows you down.
It makes you unproductive.
That's just the way it is.

SPEAKER_03 (31:59):
When you're afraid to go out to lunch because you
think you might be fired whileyou're at lunch, this is not
good for your mental health oryour work productivity.

SPEAKER_01 (32:08):
Right.
So you already, and I thinkeven, I've heard folks at the
top say this at NCUA, we'realready thinly staffed.
We were already, I mean, I knowboard member Otsuka said this,
we were already thinly staffedto begin with.
And she knows that she used towork at FDIC.
So she understands that too.
If you worked at these otheragencies and then you come to

(32:29):
work at NCUA, you're thinking,oh my God, how do these folks do
this?
This is just too much of aportfolio for one person to be
effective.
And it exposes you to potentialerror, potential mistakes, and
just not doing complete work.
I mean- Work takes FTEs.
That's how the equation works.

(32:49):
So yeah, that is absolutely aconcern of mine.
Also, you'll hear people in theindustry, and this also cracks
me up, stuff like, well, youguys aren't doing any
regulation, so there shouldn'tbe a big workload.
at the agency.
That is one very small piece ofwhat the agency does.
Examinations, running the CIF,running the CLF, just keeping
operations open.

(33:10):
My office in particular, do youknow how many requests from
Congress we would get onquestions on things that we
would have to be super preciseand get those questions back to
them in a very orderly fashion?
So

SPEAKER_03 (33:23):
your office, is there someone...
And your position in that officeat this point.

SPEAKER_01 (33:28):
Yes, there's someone in the so Chairman Hauptman has
an individual in the positionright now who I think is great.
Yes.
And I'm just

SPEAKER_03 (33:38):
thinking if I'm a member of Congress or a senior
staff right now, it's takingfour times longer to get my
questions answered by NCUA.
I'm irritated.

SPEAKER_01 (33:47):
Yeah.

SPEAKER_03 (33:48):
Yeah.
I would make sure that ChairmanHauptman understood my level of
irritations.

SPEAKER_01 (33:53):
That's correct.
Now, I'm not saying that'shappening.
I'm not saying that's happening.

SPEAKER_03 (33:58):
If the staffing's down by at least half, by your
estimation, in that one workgroup, it seems to me logical to
conclude that it's going to takelonger to respond, even to a
member or staff person'srequest.

SPEAKER_01 (34:13):
I would make that assumption.
Now, this is a veryhyper-political environment,
too.
So if I'm working at the OIACoffice right now, whose
questions do you think I'm goingto get answered first?
Right?

SPEAKER_03 (34:25):
Exactly.

SPEAKER_01 (34:26):
So there's certain members you're going to stay up
late.

SPEAKER_03 (34:31):
If Ruben Gallego sends you a question, you're
going to say, Ruben, isn't thata sandwich?
Yeah.

SPEAKER_01 (34:36):
Oh, we'll get back to that later.
It's

SPEAKER_03 (34:39):
a great sandwich, by the way.
And he's my senator.
I'm fine with Ruben Gallego.
There's

SPEAKER_01 (34:44):
a little bit of that in any environment, but yeah,
you're especially going to seeit now.
Also, the amount of annualreports the NCUA has to put out,
that also went through myoffice.
It's insane.
I did not expect that when I gotthere.
We were constantly puttingtogether an annual report
because when lobbyists go andthey want different things...

(35:05):
Thank you.
Thank you.
Elves aren't writing the annualreport.
Somebody has to write it.

(35:25):
Somebody has to get theinformation.
Somebody has to have all thepeople in the office make sure
they weigh in.
Then you got to make sure theannual report looks professional
and not like a sixth graderwrote it, right?
Make sure it's formatted andbeautiful and professional at
the level of an agency.
There's dozens of these that theNCUA has to do.
Now, let's say somebody said,well, just be late on the annual

(35:46):
reports.
So what?
Don't let perfect be the enemyof good.
You know, this is the type ofthing I hear often.
Well, guess what?
If something isn't doneproperly, the next time the
chairman goes up to testify onthe Hill, which is twice a year
usually, who's going to getcalled out on that?
That individual.
And that testimony is streamedand anyone in the world could
watch it.

(36:07):
So these are all issues that youhave to think about when you're
running an agency.
It looks easy from the outside.
I mean, any task is easy whenyou're not the one doing the
task, but it's not easy.
There's a lot that goes intorunning these agencies and it
takes really competentindividuals and many of them to

(36:29):
do it effectively.
And when you do not have that,the agency cannot run
effectively.
That's just a reality.

SPEAKER_03 (36:35):
Todd Harper said, this was some weeks ago, outcome
of NCUA staff reductions wouldbe almost certainly an increase
in the number of credit unionfailures.
We can argue if there's a linearconnection there, but I do think
if the examinations are morecasual, the probability of

(36:57):
failures goes up.
I'm not going to quantify it.
I couldn't.
His point is a good point.
Is it 100% valid?
I wouldn't go that far, but.

SPEAKER_01 (37:06):
I'll give you some perspective on that too, because
when I was at CUNA, one of thethings we lobbied for, and I
personally, this was when Ireally pushed a lot with the
board.
And this was when one of thetimes we were really active in
lobbying this.
I know the Cooperative CreditUnion was also active in this,
was during when McWaters waschair and we wanted the 18 month

(37:26):
examination cycle because thebank regulators had something
similar And we wanted that forcredit unions under certain
asset size.
Eventually, they were able togive us that.
And it was eventually expandedat the end of last year a little
further.
But at the time, the chairmanwas not in favor of that at all.

(37:49):
And this is McWatters.
This is a Republican, very wellrespected in the industry.
And he had said, look, it'sabout...
He says maybe for certain assetsizes, this is okay, but it's
about protecting the shareinsurance fund.
And if we go too long betweenexaminations, that is bad.

(38:10):
exposing the share insurancefund.
And we just can't take thatlevel of risk to expose it like
that.
And I'm thinking, really, it'sgoing to make that big of a
difference if you extend theexamination cycle for a couple
months.
Are you serious?
It's going to make that big of adifference?
We're talking two, three monthshere.
We're not talking three years.
And he was very...
He says, look, we've looked atthis situation.

(38:31):
We've run numbers.
We've analyzed it.
And I...
I trust he has because McWatterswas pretty thorough in how he
analyzed situations and issues.
And he said, I just don'tbelieve that is responsible and
it's too big of a risk to theShare Insurance Fund.
So that was the position he hadthen.
Now, fast forward, there hasbeen a little bit of expansion

(38:54):
to that period with somecaveats.
Certain credit union Campbellratings don't get the every 18
months or there's a range.
It's usually like 14 to 20.
So there is some flexibility inhow that is interpreted per
credit union, and it can betailored to a specific credit
union.
But to get to your point, one ofthe main things you are going to

(39:18):
see with the reduction in staffis that if you have a range,
like a 14 to 20 month per examcycle, this is what you have for
most credit unions, everyone'sgoing to be on the 20 and
probably going to go 20, 22, 23,because you just don't have the
FTEs to go in and do theseexaminations.

(39:40):
Or you could get thealternative.
You could maybe have the examwithin that range, you know,
maybe at 20 months.
But it might not be as thoroughan exam.
It might be kind of an in andout.

SPEAKER_03 (39:53):
That's what concerns me is that the exams will become
more slipshod.
I'm not blaming the examiner.
If I have to do 10 examstoday...
I'm going to be moving aroundpretty fast.

SPEAKER_01 (40:08):
Yeah.

SPEAKER_03 (40:09):
And I don't have a heck of a lot of time to write
these things up.
So I'm going to write them whileI'm sitting there.

SPEAKER_01 (40:13):
And again, this was something that was thought about
years ago with the Republicanboard, with the Republican
chairman having these sameconversations there.
So it's, I mean, it's not apartisan issue.
It's an issue of how do weprotect this insurance fund?
You're

SPEAKER_03 (40:26):
insurers.
None of this, in my mind, noneof this is really partisan.
I mean, things have becomepartisan in Washington, D.C.,
because everything is partisanin Washington, D.C.
Where you drink coffee isprobably partisan for all I
know.

SPEAKER_01 (40:39):
I'm a Wawa coffee person.
I'm convinced they have the bestcoffee.

SPEAKER_03 (40:44):
Yeah, I've lived half my life in New Jersey, and
Wawa is kind of like, it'salmost an institution on the
order of the Roman CatholicChurch.

SPEAKER_01 (40:53):
Yeah.

SPEAKER_03 (40:54):
But in better favor.
I've never been to a Wawa, butwhat can I say?

SPEAKER_01 (40:58):
Try their coffee.

SPEAKER_03 (40:59):
Now, NCUA was going to roll out a few other things.
There has been rolling out likea tech audit and also going to
start requiring successionplanning.

SPEAKER_01 (41:08):
Yes.

SPEAKER_03 (41:10):
What's the future of those things?
And I think both of them aregood ideas.

SPEAKER_01 (41:15):
Yes.
So I know they're asking forcommentary on some of these some
of their rules.
What and I know this is sort ofacross the board with all.
agencies and regulators andgovernment offices, where
they're asking the industry, isthere anything that we should
cut?
Is there anything that is aregulatory hurdle for you that

(41:37):
we should reconsider?
The succession planning rule waspassed 3-0 late last year.
So all board members voted forit.
I have heard concern with somein the industry about the
regulatory burden of the rule.
And I urge people to read therule because I'm ultra sensitive
to regulatory burden.

(41:58):
impediments that make itdifficult for smaller
institutions to really operateand do their job because that's
what I lived and breathed for 14years as a lobbyist for both
community banks and creditunions.
I did not feel that this was thecase with this rule.
I felt like this is somethingyou get your board together, you
put pen to paper, write a fewthings down.

(42:20):
There's even a model form inthere for smaller credit unions.
If you're a build from there.
I think ChatGBT could even helpyou with this project, right?
Get it done, put it in the file,ask the examiner, hey, examiner,
did I get it right?
Because if I didn't, tell me howto get it right next time.
They're not going to cite youfor this.
I mean, it's not thatenvironment right now.

(42:42):
This is a no-brainer.
So I think for those that arereally concerned about this
rule, I'm telling you right now,it's not one that's going to
keep me up at night at all.
It's literally an exercise toget you thinking about the
succession of your institutionto help your members.
And the reason for it, I know atthe time, Chairman Harper was

(43:03):
concerned because he was seeingcredit unions merge with others
because they lost their CEO.
And he said, look, I don't careif a credit union goes under or
merges.
I mean, these are businessdecisions.
But it is unfortunate to see onedo it.
And they have to make thatbusiness decision, not out of
choice, but because they have noother choice.

(43:24):
Particularly

SPEAKER_03 (43:24):
when your CEO is 65.

SPEAKER_01 (43:27):
Right.

SPEAKER_03 (43:28):
And it's not like the person was 45 and had a
horrible heart attack.
No, no, no, no.
You had five years to plan forthis succession and you didn't.

SPEAKER_01 (43:38):
Yes.
And that also is indicative oflike, if you can't do that, what
other things are we, are weletting slide?
Because this is, you know, Ihave three kids.
I got a will.
I'm not going to think, this isjust sort of a gimme you have.
So this is not one of thoseheavy lift, like the QM
rulemaking, like the TILA RESPAforms rulemaking, like

(44:01):
interchange.
This is nothing like that.
To

SPEAKER_03 (44:05):
me, succession planning is good business
practice in any publicly heldcorporation.
Yeah.
If I'm the chairman of theboard, I will say to the CEO,
what's the succession plan thatyou've been working on?
In other words, who is going tosucceed you?
What candidates are youtraining?
What candidates are youdeveloping?

(44:26):
And if the CEO says, I ain'ttraining nobody, I'd say, man,
you got to get started todaybecause otherwise you're going
to be really mad.

SPEAKER_01 (44:33):
Right, right.
This is just something you do asnormal business practice, and
your members deserve to havethat.
It's not great for a member of acredit union to love their
credit union and then be told,no, your credit union is merging
with this other one because theydon't have anybody to take over
when they could have easily hadthat person in place to do that.

SPEAKER_03 (44:51):
So I agree with Harper.
I've also said, and I've gone onrecord, if I were a board
chairman at a small creditunion...
I'd write for my succession planfor CEO, going to merge out of
existence.
And

SPEAKER_02 (45:04):
people say,

SPEAKER_03 (45:05):
what would the examiner say?
I don't care what he says orwhat she says.
I'm going to write it.
And then we can scream at eachother.
I'm good at that.

SPEAKER_01 (45:13):
Right.
Well, here's what the examinersdo.
I mean, I can't imagine thisenvironment is going to be one
where the examiners are lookingto just annihilate a credit
union in the exam process.
I think it's going to probablygo the other way.
And let's say it was thatenvironment.
You know, I've been in the worldof exams as well, working for a
bank.
You go in with like the attitudeof, look, if we didn't get it

(45:37):
right, you let us know.
We will get it right next time.
We'll do whatever you want tomake this perfect.
This is an audit.
You're not going to argue withthem.
You're going to say, what can wedo to work with you to all get
on the same page so that we'reall BFF here?
You know, that's the philosophyand approach you take.
And if you have that, you'regoing to be fine in a lot of
issues with the examiner.
Not everything, but a lot ofthem.

(45:58):
And of course, it depends on theexaminer.
But typically, that's theapproach.
that is more successful thannot.
There are horror stories outthere.
I've experienced that on thebank side.
I see it way more on the bankside, which gets to another
point I'll make in a littlewhile.
But I have seen it.
But you can't act like that'sgoing to be every single time.

(46:19):
It does happen.
I think

SPEAKER_03 (46:21):
that's the novel.
Sometimes it's just apersonality clash or something.

SPEAKER_01 (46:25):
Right.

SPEAKER_03 (46:25):
It's unfortunate, but it's not.
To me, I've heard lots ofpeople's so-called horror
stories about credit unionexaminers.
I think sometimes they were justasking a few questions that the
credit union wasn't prepared toanswer.
It didn't rise to me as apersonal vendetta against you.

(46:47):
It didn't.

SPEAKER_01 (46:48):
And I think too, I noticed this a little more with
the credit unions than with thebanks.
A little bit with the banks, butmore with the credit unions.
They really take pride in howthey run their credit unions.
So when somebody comes in andsays, hey, have you looked at
how you're doing this?
Maybe this could be done alittle bit differently.
Sometimes they might be a littlemore defensive.

(47:08):
It's

SPEAKER_03 (47:09):
embarrassing to all credit unions.
And this kind of ties in in acrooked way to McWater's point.
It's embarrassing to all creditunions when a credit union fails
because a senior executive hasbeen stealing from it for 20
years.
I don't care if their creditunion is$20 million an asset.

(47:29):
It looks bad for every singlecredit

SPEAKER_01 (47:31):
union.
Absolutely.

SPEAKER_03 (47:33):
And that should be caught in an exam.

SPEAKER_01 (47:36):
Yeah.

SPEAKER_03 (47:37):
Sometimes the thieves are fairly clever about
covering that up.

SPEAKER_01 (47:41):
Well, and that's an excellent point that you're
making about the exams.
And one that I...
I've had many conversations whenI do some speaking about the
distinction between banks andcredit unions.
And this was a very, very bigdistinction I noticed coming
from ICBA to CUNA, was that atICBA, it's Independent Community
Bankers of America.

(48:02):
Every bank cares aboutthemselves.
If their bank is doing well,they don't care how every other
bank is doing.
Their bank is doing well,they're happy.
Credit union...
It's not like it's branded, likethey're all branded together,
which you don't see on the bankside.
So it's not like I'm a member ofa credit union, you say.
You don't say I'm a member ofsuch and such credit union.

(48:23):
It's you're a member of a creditunion.
Credit unions are all brandedtogether.
Well,

SPEAKER_03 (48:29):
every big credit union CEO has a story where the
agency calls him up and says,will you merge with this little
crappy credit union?
He already knows why he's beingasked or she knows.
Because that credit union isabout to fail and NCUA does not
want the failure.
So could you take it out?
It's mercy killing.

(48:49):
Just do it sweetly and kindly.
It's a merger.
You don't see that sort of thingmuch in the banking world.

SPEAKER_01 (48:55):
No.

SPEAKER_03 (48:57):
And Jamie Dimon took Silicon Valley Bank because he
saw things in that deal forChase and Chase's shareholders.
He was not doing the regulator afavor.
He happened to be doing theregulator a favor, but the
reason he agreed to do the dealwas there was something in it
for Chase's shareholders.

SPEAKER_01 (49:13):
Yeah, you definitely have this feeling of a credit
union movement that we're allpart of the same religion or
movement or what's good for mycredit union is good for all
credit unions.
You do not see that on the bankside.
You

SPEAKER_03 (49:27):
don't see anything like the CUSO system on the bank
side.
And I've been saying this fromthe moment I began to understand
what CUSOs were, and it took mequite a few years to realize.
QZOs are, I think, creditunion's secret weapon.
I think they're vastly moreimportant than the tax
exemption.
Now, what do you think about theagency consolidation?

(49:49):
Do you think that's on thetable?
That's a possibility for NCUA?

SPEAKER_01 (49:53):
Yeah, I mean, I think everything is on the table
right now.
And one thing, one mistake Ithink some folks make is You
know, do I think it's on theabsolutely?
Absolutely.
I think it's definitely an issuethat could could happen.

SPEAKER_03 (50:08):
Now, I'm told ICBA is opposed to sharing a
regulator.
You

SPEAKER_01 (50:15):
know, and I have contacts over there still
because of my my employmentthere.
And that's that is sort of theposition I've been hearing, too.
But when I was there, that wasnot the case.
Yeah,

SPEAKER_03 (50:27):
this is just I'm just passing out.
Yeah.

SPEAKER_01 (50:29):
When I was there, they wanted the two things you
there, the three things that youadvocated for.
in terms of credit unions whenyou were at ICBA.
Now, again, this wasn't heavywhen I was there because
remember we wanted to be BFFwith them because we were in the
middle of Dodd-Frank and youwanted the credit union next to
you when you were lobbying.
So it wasn't as heavy then, butthe three major issues was

(50:52):
credit unions should tax exemptstatus, obviously.
Credit unions should be subjectto CRA and credit unions should
not have their own regulators.
So that was an issue definitelyon the table because bankers
think that the NCUA is a nice,happy, fuzzy teddy bear of a
regulator for credit unions whenthey don't necessarily have that

(51:15):
experience dealing with theirregulators.
Do I have that?
I don't know how to answer that.
I definitely see a distinction.
When I was working for thecommunity bankers and dealing
with the FDIC and the OCC andFed and some of those
regulators, there was a hugedifference in dealing with those

(51:36):
regulators at ICBA versus goingto NCUA working for CUNA.
Like night and day to the pointwhere I was like, I remember I
was in a meeting with an NCUAboard member.
And I thought, is this reallyhappening?
Because the board member waslistening, was asking questions,
was candid, was giving intel.

(51:58):
You would never in a millionyears have that experience ever.
at ICBA going into talking toFDIC or any of these banking
regulators.
They were not, they would saynothing in the meetings.
You would talk, they would say,okay, thank you.
And then the meeting would bedone.
I mean, that was pretty much it.
It was very cold that way.
That was how those regulatorsoperated.

(52:19):
NCUA has a much lighter touch asa regulator, I'm just going to
say.
Working at the Fed versusworking at the NCUA, huge
distinction.
Lobbying both agencies, hugedistinction.
So do I think it would be hugelyproblematic if credit unions
lost their regulator?
I absolutely think it would.
I think it would be very, veryproblematic.

(52:39):
And I think they would getswallowed up.
The issues would get swallowedup.
The entities would get swallowedup.
The lobbies would get swallowedup by this regulator that's only
going to look out for some ofyour largest banks.
I mean, when I worked at theFed, we wrote all the consumer
financial protectionregulations.
So that impacted credit unionstoo.
And I tell you, nobody knew whoCUNA was at the Fed.

(53:02):
They thought CUNA and CUNAMutual were the same
organization.

SPEAKER_03 (53:06):
I thought that for a number of years.

SPEAKER_01 (53:10):
I mean, what's CUNA?
And they called it CUNA.
OK, so like that tells you theimpact of that association at
the Federal Reserve.
Now, at NCUA, totally differentbecause it's a niche regulator.
It only regulates credit unions.
So the level of understanding ofthe industry, the level of
understanding of the externalstakeholders and players and

(53:33):
everybody, it's like one.
little family.
We all know each other.
Everybody knows each other.
I mean, Todd Harper shows up atevents and everybody knows who
he is and he knows who they allare.
You know, that's thedistinction.
So you don't see that.
And that absolutely will go awayif you have one regulator
overseeing it.

(53:54):
overseeing everybody or oneregulator like FDIC taking on
community banks and creditunions.
It also concerns me if the shareinsurance fund and the DIF are
like combined.
I feel like that should bedecentralized.
I think it's better for thesystem.
So do I think it's going tohappen?
I think anything is on thetable.
I tend to think it'll be talkedabout, but maybe not essentially

(54:17):
happen?
Because I don't know if there'stime for that to happen.
You'd have to have a statutorychange.
I don't know.
They might try to do it throughlike putting the NCUA under
treasury.
Maybe they might sneak somethingthrough.
Who knows?
So there's always something thatcould go on.
I know folks in treasury, youknow, at the top have said we
are not in favor of this.
But again, cabinet affairs, theWhite House is deciding these

(54:40):
issues, not not the cabinetlevel officials.
It's all being done in the WhiteHouse.
So I don't care what thesecretary of, that's great that
the secretary of treasury saidthat, you know, my, my sixth
grade daughter thinks the samething, but it's really not
their, their place to decidethat it's really going to be
decided in, you know, in theWhite House and what the White

SPEAKER_03 (55:01):
House.
That makes lobbying moredifficult though.
A lot of the people on the Hill,still have nice titles, chairman
of this, blah, blah, blah.
What influence do they actuallyhave today?
The answer in many cases is theydon't seem to have a hell of a
lot of influence, unfortunately.
That's how I feel.
Is this a permanent position?

(55:24):
I seriously doubt it.
I think this is a blip inhistory.

SPEAKER_01 (55:28):
Yeah, and I mean, let's look at history.
Would this kill the industry?
Well, I mean, okay, the NCUA is55 years old.
The 55-year birthday is thisyear.
Share insurance funds, 55 yearsold.
Funds weren't insured until the70s.
Before that, I think the NCUAwas...
It started out as like thefarm...

(55:49):
It was in the farm credit thing,administration.
Then it was a part of the FDICat one point.
Then it was like another agencythat was part of HHS.
So it's gone through anevolution before...
1970 when it then became theNCUA.
And credit unions were there.
They were growing.
They were existing.

(56:09):
They were growing when theydidn't have their own
independent regulator at thattime.
They

SPEAKER_03 (56:15):
also had extremely simple business models.

SPEAKER_01 (56:18):
They did, yes.

SPEAKER_03 (56:20):
Basically, they took in savings account money.
They made loans.
Almost all the loans weresecured by something, a house, a
car, whatever.
And it was what they call aspread business.
Right.
And there was no shareinsurance.
You were okay.
You were really fine.

SPEAKER_01 (56:37):
And you didn't have the fund.
So now you have a shareinsurance fund.
You know, 1970, you have thefund, you have the agency.
It is really, the way this isstructured now, they really, it
would be very, very problematic,in my opinion, if the credit
unions did not have their ownindependent regulator, not
regular reports to treasury.
No, independent regulator, notlike the OCC.

(56:58):
No, independent.
You're your own thing.
And with the share insurancefund, just like the FDIC with
deposit insurance fund, that isreally the way to continue
running things.
And even when you haveconsolidation, you still have
large credit unions.
The asset size of credit unionsis getting larger.
The assets of credit unions inthis country is getting larger.
There are more credit unionmembers now than ever before.

(57:21):
So there's other numbers thatreally indicate that a separate
regulator is extremelynecessary, even if credit unions
decline another 50% in the next20 years or so.
It's still very

SPEAKER_03 (57:34):
necessary.
The sheer number of creditunions.
I I don't see as a meaningfulmetric because the size of the
credit union industry continuesto grow and community banks are
shrinking to a number.
These are just realities.
Now, tax exemption, people werecelebrating, credit union people

(57:55):
were celebrating, oh, it's offthe table.
my attitude

SPEAKER_01 (57:58):
well for now it is

SPEAKER_03 (58:00):
yeah my attitude is how can break loose in
reconciliation dude at 3 a.mthat can be written into the law

SPEAKER_01 (58:07):
you live today you got to live day by day you know
that's that's the key here yougot to live your life day by day
right now today you today you'reokay what's tomorrow gonna look
like

SPEAKER_03 (58:17):
yeah uh yeah that's totally my position i'm not
saying i think tax exemptionwill be taken away.
I don't have a position on that.
All I'm saying to people is, no,just because it's not in the
writing right now, this fight'snot over.

SPEAKER_01 (58:34):
Absolutely.
Absolutely.
I could not agree more withthat.
And I mean, even, you know, Iwas talking to some ICBA folks,
you know, they're now startingto push for the tax exemption
and to be taken away for creditunions that are over$1 billion
in assets.

(58:54):
And that's a sign.
They're looking, look, we'regetting closer on this argument.
Let's kind of give it a littlenuance here.
Maybe that will help ourposition.
And the concern is more aboutthe mergers or the buyouts, the
credit unions buying banks.
And they could kind of tie intothat.

SPEAKER_03 (59:14):
Oh, come on.
That's a handful of things.
Spare me.
Well,

SPEAKER_01 (59:17):
that's what they're saying.
That's what their membership is.
That's how they're selling it totheir membership.

SPEAKER_03 (59:23):
What I've always said is, hey, no one put a gun
to the board members of thiscommunity bank that sold out.
Oh, right.
They sold out.
They sold out because the creditunion offered more money than
any of you

SPEAKER_01 (59:36):
both.
That's right.
That's the whole of theargument.
It's a

SPEAKER_03 (59:39):
simple financial transaction here.
So shut up.
Go away.
I ain't going to fight with youno more about it.
You're just crazy.

UNKNOWN (59:45):
Yeah.

SPEAKER_01 (59:45):
Don't even talk about it.
Because again, that's the bighole in the argument that
nobody, your member made thedeal.

SPEAKER_03 (59:53):
Yeah, exactly.
That's your

SPEAKER_01 (59:55):
member.
If you have a problem, talk toyour membership.

SPEAKER_03 (59:57):
And there's no vote by the depositors in the
community bank.
No, most of these are privatelyheld companies.
It's four people have a vote.
And they all voted, yeah, wewant the money.
We want to move on.

SPEAKER_01 (01:00:12):
I'm trying to think how this issue got started.
Because when I was at ICBA, thiswas never talked about.
I mean, this happened.
It was fine.
When it happened, it wasunderstood it was a business
decision.
It was not something that thelobby.
I think somebody

SPEAKER_03 (01:00:24):
just decided.
Some lobbyist

SPEAKER_01 (01:00:26):
decided.
I think so.
I think there was someone on the

SPEAKER_03 (01:00:28):
board.
This was a whistle they couldblow.

SPEAKER_01 (01:00:32):
And

SPEAKER_03 (01:00:32):
everybody would say, oh, that's evil.
This is evil.

SPEAKER_01 (01:00:35):
Right.
Because this hasn't, this didn'tjust happen.
This has been happening foryears.
This isn't like a new thing.
And

SPEAKER_03 (01:00:41):
the people doing it.
You know, it's some guy whosegrandfather started the bank in
blah, blah, blah, Texas.
And he wants to cash out.
He's 65 years old.
His kids don't want to run thelittle community bank.
Exactly.
They want to work for Chase.
So, and he said, great.
This credit union is willing togive me a few million bucks.

(01:01:02):
Wow.
It sounds great.
Let's do it.

SPEAKER_01 (01:01:05):
Yeah, and they're able to do it.
No

SPEAKER_03 (01:01:06):
one's being harmed in this thing.

SPEAKER_01 (01:01:08):
Right.
And you're going to see thatmore with community banks
because, like you said, thebusiness model was very much a
family business kind of model.
And now grandpa's leaving andthe grandchildren don't want to
take on this business.
It's not a fun

SPEAKER_03 (01:01:22):
business.
Community banks were...
We're run out of the countryclubs.
That's where you met the peopleyou're going to make loans to.
That's right.
The big deposits.
And as a guy said to me, youknow, for young people, the
country club is Starbucks.

SPEAKER_01 (01:01:37):
Right.
Or Wawa for me.

SPEAKER_03 (01:01:40):
So his point was this young generation doesn't
want to hang out at the countryclub.
So, yeah, it's your communitybanks have to change their whole
model.

SPEAKER_01 (01:01:48):
Yeah, there's a lot of truth to that.
Because too, when you were headof a community bank, you were
like the mayor of the city.

SPEAKER_03 (01:01:55):
Exactly.
It was a

SPEAKER_01 (01:01:57):
big

SPEAKER_03 (01:01:58):
deal.
Down the country club, manypeople wanted to be your buddy.
They wanted to play golf withyou.
They wanted to borrow a littlemoney from you.
I mean, that was extremelyimportant.
And now it's like, So you run acheck cashing places.

SPEAKER_01 (01:02:14):
Right.
Yeah.
The panache or whatever, theintrigue of it is going away.
And now I could just get mybanking on my app and I don't
really need the, you know.
So it's definitely that kind ofmodel has it.
There is a dated quality to it.

SPEAKER_03 (01:02:33):
Before we go, think hard.
Can't all be mega banks, can it?

(01:02:55):
It's my hope it won't all bemedical banks.
It'll always be a place forcredit unions.
That's what we're discussinghere.
So figure out how you can help.
Get in touch with me.
This is rjmcgarvey at gmail.com.
Robert McGarvey again.
That's rjmcgarvey at gmail.com.
Get in touch.
We'll figure out a way that youcan help.
We need your support.

(01:03:16):
We want your support.
We thank you for your support.
The CU 2.0 Podcast.