With the expiration of National Credit Union Administration Board Member Rick Metsger's term Aug. 2, the possibility of the agency going down to just a single member is once again coming to the fore.

Metsger has not indicated he plans to leave prior to his replacement being named, and many a board member has served as a holdover for a good number of months past a term's expiration. But his seat isn't the only one still waiting for a replacement to be named.

After more than six months in office, President Donald Trump still has not nominated a third board member. Should Metsger depart before Trump takes action, Chairman J. Mark McWatters will become a board of one.

It's not the first time the regulator has been so shorthanded, but with the recent expiration of Metsger's term, Credit Union Journal consulted a panel of former NCUA board members to ask how McWatters might proceed as the only tenured member, and whether or not a further depleted board might spur the administration to kick start the nomination process.

Mark McWatters Rick Metsger NCUA Board
The reintroduction of a House bill on risk-based capital standards for credit unions could create a host of new issues for the the already short-handed NCUA board, including Chairman Mark McWatters, left, and board member Rick Metsger, whose term has expired.

“It took me a year to get confirmed as chairman and it was a year of my term that was eaten up, but at the end of my term I made up that year when Chairman McWatters took my seat,” recalled former Chairman Michael Fryzel. “That’s the normal way things work.”

The board has dropped to one member at least a few times in the past, including in late 2001 when board members Geoff Bacino and Yolanda Wheat’s terms expired, leaving Chairman Dennis Dollar as the only sitting member.

Dollar, who now runs an Alabama-based credit union consultancy, suggested that dropping down to one member “will certainly increase the pressure on the White House to fill the vacant NCUA slots before the end of 2017,” but that opinion wasn’t universally shared, particularly considering the large number of positions that still need nominations.

“Naming an NCUA board member probably falls at or below the level of nominating an ambassador to Hungary, and if that’s the case, [the administration] probably doesn’t care if there’s only one board member,” said former board member Geoff Bacino.

Both McWatters and Metsger declined to be interviewed for this story, but NCUA did confirm that Metsger serves at the pleasure of the president and plans “to continue to work in his position [with] Chairman McWatters on several pending issues important to credit unions, such as the proposed plan to close the Stabilization Fund.”

However, if finding a replacement takes longer than usual and Metsger does eventually elect to leave the board before his replacement is confirmed – as former chairman Debbie Matz and some others have done in the past – it could cause problems.

“It would hinder the agency’s ability to move any new initiatives forward,” observed Matz. “The agency could still conduct its day-to-day operations,” she added, but whether such a short-handed board would spur the Trump administration to speed up the nominating process “is anyone’s guess.”

“They’ve been working well together and I would hope Rick stays,” said Bacino. “The concern I have is that lately there’s been a lot of talk about regulatory consolidation and there’s unhappiness on a lot of people’s parts with the [Consumer Financial protection Bureau]. So what would stop the administration from saying ‘Let’s just roll this agency in with the FDIC? They’ve already got a board, we’ve only got one board member here.’ The previous administration already had another job they had proposed for McWatters and he’s a very qualified and well-connected guy. They may want to put him somewhere else. But if [CFPB Director Richard] Cordray goes back to Ohio to run for governor as everyone espects him to do, how about Mark McWatters at the CFPB? If we get down to one board member, there may be an increased push to say ‘We’re already down two board members, rather than trying to fill those seats, let’s merge it in.”

Nominations coming soon?
Most observers agreed, however, that such a scenario was unlikely, and that the president will get around to nominations in his own time. The White House is rumored to be considering resumes, with an eye toward making nominations before the end of this year.

Should the board drop to just one member, however, sources were unanimous that Dennis Dollar set the precedent for how to conduct business in that event.

“When Dennis Dollar was the chairman and he was the only board member, he conducted a board meeting but just received updates at the meeting and didn’t conduct any business,” noted Matz. “The statute says you need a quorum in order to make certain decisions, so I guess it would be up to the chairman and general counsel what actions they can and cannot take, but it would certainly limit the ability of the agency to move forward any new initiatives.”

And, added Fryzel, in spite of everything taking place today, things are relatively quiet compared to when Dollar held that position just a few months after 9/11 or when the financial crisis hit.

“It’s a rarity that it ever gets down to [one member], and it doesn’t last long if it ever does happen,” he said. “If it did, I’d advise Chairman McWatters to continue with the reorganization of NCUA that he’s already leading out…I don’t see any emergency things out there that he would have to worry about; it’s certainly not like back in 2008 when we had the corporate crisis.”