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Opinion

Will Work on Supplemental Capital Be Hamstrung by Matz's Exit?

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n what likely will be my final interview with Debbie Matz , one topic of note: what happens next?

While the National Credit Union Administration has been down to two board members—and even just one—and continued to act, there's a pretty big difference between attending to some administrative housecleaning and promulgating significant—and potentially controversial—new rules.

Matz noted one of her regrets was that the field of membership rule wasn't finalized on her watch, and as it's one that bankers are keeping a close eye on, there may be some reluctance to finalize it without the benefit of an NCUA board at its full complement.

Perhaps of greater concern is the fate of the supplemental capital proposal—which has yet to be proposed, much less finalized. During CUs' outrage over the agency's risk-based capital rule, one of the battle cries was no RBC without supplemental capital.

While the agency opted to move forward with RBC anyway, regulators went to work on a supplemental capital proposal.

The question is: will it happen before the 2019 implementation of RBC? Three years sounds like plenty of time, right?

That depends on whether the two-person board—which could, theoretically, become a one-person board in relatively short order—will be willing to act on such a major undertaking. It is one thing to finalize a proposal that's already been out for comment, as is the case with FOM, but it's another to tackle such a significant new rule essentially from scratch.

It also depends on who is—and isn't—sticking around at NCUA. Vice Chairman Rick Metsger's term expires Aug. 2, 2017, and Board Member J. Mark McWatters, though his term isn't up until 2019, has been appointed to serve on the Export-Import Bank. While the same reason no one expects Matz's replacement to be named anytime soon is also why McWatters isn't expected to leave anytime soon—both moves have to wait until the Republican-controlled Senate is willing to confirm the Democratic White House's appointments. And with all this happening during one of the wildest presidential elections in recent memory, the fact remains that it could be a while before the agency's board is running on all three cylinders, as it were.

When asked how all this might shake out, Matz replied, "that's anyone's guess."

Too true.

Editor in Chief Lisa Freeman can be reached at lisa.freeman@sourcemedia.com.

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