The Opportunity In The NCUA Board Appointment

Credit unions should seek to ensure that the appointment process restores confidence in the political process.


Carla Decker’s nomination to the NCUA board seat now held by Gigi Hyland must be confirmed by the full Senate. The Senate Committee on Banking, Housing and Urban Affairs hearing anticipated for this month gives Congress, the public and credit unions an important forum to openly discuss vital issues between credit unions and NCUA.

This public discussion about critical public policy issues is sorely needed. Confirmation hearings are one of the few occasions when Congress can exercise its oversight of an independent agency. Moreover the appointment process is a chance to learn what the Obama administration’s implied mission is for NCUA.

Relevant questions are potentially even more significant because Decker is CEO of District Government Employees Federal Credit Union, which, with $45.7 million in assets, is half the size of the average credit union. Her experiences and voice could be invaluable in presenting a smaller credit union’s perspectives. Some commentators view her peer credit unions as disadvantaged in the market place. As CEO, Decker has dealt firsthand with paying for NCUA’s insurance assessments and growing budgets, implementing new rules, responding to new exam priorities and reconfiguring options after the dismemberment of the corporate system. Her observations would be valuable in any public forum, even if she were not the nominee for the Board.

Some Important Questions On NCUA Policy And Practice

To ensure that the important policy topics are discussed in the hearing, it is vital that the relevant areas be publicly developed. These then should be communicated to committee staff, trade groups, the nominee and the media. A brief summary of some of these include:

  • Does the nominee use the seven principles of cooperative practice in her business, and if so how? How do these apply to NCUA as a regulator?
  • Is her credit union a member of a corporate credit union?  Did her credit union capitalize a corporate?
  • Does her credit union use CUSOs and how vital are they in her credit union’s operations?

(A full set of potential questions is provided below.)

A Bi-Annual Process – Action Needed Now

NCUA board vacancies generally occur on a two-year cycle. The nomination of a board member should be an opportunity to enhance and restore confidence in this political process. Firstly, in how the administration selects their nominee and, secondly, with the insight provided from the Senate’s confirmation dialogue.

The current mood of the country about political processes is not good. The relationship between NCUA and credit unions is a microcosm of this larger, sour feeling. Regaining trust in the insurance fund’s oversight and use, in the role of the Central Liquidity Facility, and in how the NCUA board manages the bureaucracy are critical to rebuilding confidence in NCUA.

This specific nomination is about more than Decker. It is a way for letting the Administration and Congress know that credit union issues are not just an open seat on the NCUA board.

Choosing regulatory leadership is a critical decision for enabling credit unions in the 21st century. Credit unions’ participation in this process, by communicating with trade groups, with Senators and Congressional representatives or even the media with their questions should be a top priority – now.

This is not a moment for being a spectator at a political sporting event, watching while some try to score points for or against a nominee’s background and credentials. Who would have ever believed that the current NCUA board members were anything but well-qualified? Yet the current state of things suggests that qualifications are less important than a grasp of how to manage a bureaucracy with policies designed to make an industry successful while also responding to national priorities.

The nomination cycle will be ongoing. Can we get the process on the right track this time around?

Potential Areas Of Questions On NCUA Policy And Practice For The Nominee

  1. Many credit unions use the seven principles of cooperative practice to design their business strategy. Did you use these in your credit union now? If so, how? How do you believe these principles should govern NCUA policy and practice?
  2. Are you a member of a corporate credit union? How have you used the corporate? Did your credit union elect to capitalize a corporate? What do you think the role of the corporate should be in the credit union system?
  3. Is your credit union a member of the Central Liquidity Facility? At this time the CLF has not demonstrated any operating capability but still retains $2 billion in credit union capital, an amount that far exceeds the total capital in all continuing corporates of $1.4 billion. Do you think there is a role for the CLF? What is it? Since the CLF is capitalized solely with credit union capital, what governance role should credit unions have in its oversight? Should this role be like the FHLB system or similar to the Federal Reserve’s advisory board’s role? Do you think credit unions should be able to withdraw their capital from the CLF?
  4. The current NCUA board has failed to comply for the past three years with section 1752a § 102 of the Federal Credit Union Act on reporting to the President and the Congress. What would be your response to this failure? What would you do to ensure NCUA follows all of its reporting responsibilities under the FCU Act?
  5. Over the past four years NCUA’s policies have been out of sync with the administration's stated priorities including ensuring credit was available during the depths of the Great Recession, the encouragement of loan modifications for borrowers experiencing temporary economic hardship, the reduction in government  regulation and most recently the freeze in federal spending. What do you believe NCUA’s alignment with an Administration’s (Republican or Democratic) policy priorities should be?
  6. NCUA’s reporting of its management of credit unions' assets has been neither timely nor transparent. The independent audits for 2008 of the three balance sheets under its control were over a year past due and much too late for oversight of NCUA’s actions. At the moment, the last independent audit for the Temporary Corporate Stabilization Fund set up by Congress is over 21 months old (December 2009). During this time NCUA has seized more than $50 billion of credit unions assets, set up a $30 billion Wall Street guaranteed note program using the full faith and credit of the US government, and yet issued no financial statements or accounting for any of these actions. Just 60 days ago the Agency assessed a $2.0 billion insurance premium because of a funding shortfall in managing the assets taken from corporates. What would you do as a board member to release a full accounting for these assets and their disposition as soon as possible? Are you in favor of disclosing the full amounts paid and being paid to all third party firms such as Barclays and PWC for the activities during these actions?
  7. Does your credit union work with any CUSOs? What is your view of the value of CUSOs from your experience? NCUA has proposed extending its regulatory authority over CUSOs even with the specific limits on CUSO activity in the Federal Credit Union Act. What role do you think NCUA should have with CUSOs?
  8. NCUA has been very public in its efforts to sue personally the boards and management of corporates for their alleged misjudgments and mismanagement when investments, legally authorized and reported, then deteriorated resulting in significant loss provision expenses (OTTI). At all times, NCUA examiners were on site daily and as a general practice conducted full semiannual examinations which resulted in high exam ratings. What do you believe is the responsibility of the regulator in this situation and how should that accountability be reported?
  9. One of the phrases describing credit unions is that they are “different by design,” which refers to their member-owner structure, democratic governance, local funding and lending, and the singular focus on the well being of their members. How as a credit union CEO have you incorporated these concepts? How as an NCUA board member would you enhance the ability of cooperatives to thrive with its community of consumer-owners?



Nov. 10, 2011


  • The NCUA rated the District Government Employees FCU, the institution run by NCUA Board nominee Carla Decker, a CAMEL 3 and criticized it for having a “high strategic risk". I repeat a “high strategic risk"Credit Union.

    Enough said!
  • It is an embarrassment and a disgrace to all credit unions that she is nominated to serve on the NCUA Board. Did they not look at what she has done or not done with her credit union? The financial numbers for her credit union are horrible and it does not matter what kind of credit union she runs. Four years of operating losses should disqualify anyone from being nominated and knowing this she should have not accepted the nomination.


    $46.3M 12-2010 ($212,834)

    $42.5M 12-2009 ($483,946)

    $41.9M 12-2008 ($369,282)

    $39.9M 12-2007 ($119,797)


    How much money must you lose in 4 consecutive years in order to get nominated to serve on the NCUA board? The credit union gives a whole new meaning to the term "not for profit."
    Marty Phillips
  • CEO Decker's credit union pulled down some $1.5Million in TARP. The $1.5Million has not been repaid. Does CEO Decker have a plan to repay the $1.5M anytime soon?
    Tony Constanzo
  • Good points for consideration
  • I applaud Chip for raising these important questions to be asked during the confirmation process. I would add some other questions;

    1. The Inspector General of NCUA has noted numerous instances of failed examination processes. In many of the examinations, signficant problems were noted but there was little or no follow up to assure that the problems had been resolved. In other cases signficant problems were never discovered. Does the nominee agree that the examination process needs to be reviewed? Would the nominee agree to make some or all of the examination findings public so that members are aware of sginficant problems?

    2. Credit unions loudly proclaim that members are owners of the credit union. Yet the governance practices (and examination practices noted above) indicate otherwise. Members rarely vote; most Board members are nominated without opposition and are elected by acclamation so that most Boards are self-perpetuating; annual meetings are sparsely attended; members are not privy to examination results and have little or no knowledge of serious internal problems until it is too late. What changes would you recommend to increase the member's participation in credit union governance?

    3. The CAMEL rating system is the primary means of summarizing NCUA's rating of the safety and soundness of insured credit unions. The M in CAMEL refers to management. I have been a credit union union CEO or volunteer for over 30 years. I have never seen any serious review of management or any definitive standards that are reviewed and reported on as part of the examination. The M is almost always a derived rating based on the CAEL ratings. Do you agree that NCUA should do more to evalute the performance of management and the Board and Supervisory Committee according to a defined set of standards?

    4. The Credit Union Membership Act of 1998 gave credit union's the authority to convert to a mutual savings bank charter. For years credit union trade associations and credit union in general have considered charter options as a core principle of the credit union system. Historically the option for credit unions was to either choose a state or federal credit union charter. The dual chartering option offered credit union the choice of the best charter and encouraged both state and federal regulators to consider the needs of credit unions and balance those needs with the desire to regulate. It seems that NCUA and trade associations have drawn the line on charter choice and demonstrate a clear prejudice against the option of mutual savings bank charter change. Do you agree that the option of charter change is beneficial for credit unions whether that option is state, federal or mutual savings bank charter? Do you agree that the option of changing charters to a mutual savings bank is a good way to encourage better regulatory practices by NCUA?
    henry wirz
  • As I read, I don't think Chip Filson is advocating for or against a Decker appointment. Believe he is just saying that a small credit union CEO perspective and the magnitude of challenges they now face could be a good thing ultimately for all to have on the Board (with the right nominee I firmly agree).

    The article comments and observations are very good and I think we all need the questions answered by the nominee publicly to understand what we are likely to see moving forward from NCUA -- I hope CUNA and NAFCU will help but I'm not holding my breath. I think Decker (and any other nominee's) answers to these questions are critical now given the decisions made the last few years at NCUA. Are we going to rubber stamp more of the same practices & conserve/over_regulate/assess/spend philosophies or will the new nominee be able to deliver real leadership and help us chart a new productive path? In particular, will he/she stand up to the staff at NCUA, take the long view, and actively seek external perspective?

    I agree that the performance of Decker's CU in particular though are worrisome and raise questions about her leadership and how she would help enable our system as a whole to improve. Did CUNA and NAFCU have a role in this or was this a surprise to all? Not our finest hour here I fear.
    Concerned CEO
  • Thank you commenters for getting to the real numbers that Chip probably couldn't address, especially if he wanted to keep his job.

    This really reveals the partisanship involving the pick. I was surprised that the pick didn't come from Chicago.

    Cain accusers all seem to come from there even though he hasn't worked there.
    Hawaii CU employee
  • I have been invloved with the credit union movement (yes, I said movement not industry)for almost 30 years now. I began as a field examiner with NCUA in 1982 and have held managment positions in both natural-person credit unions and a corporate credit union (Midwest Corporate). I for one can only remember a handful of NCUA Board members that I would considered deserving or qualified of thier nomination and Decker is not one of them. It is great that the nominee is from within our own ranks, but, there had to be a better choice. This nomination stirkes me once again as a political reward where the agency Board is agian used for political favors instead of being treated seriously as a meaningful regulator of more than half of the country's financial institutions. I always wonder about the process for nominating an NCUA Board member, does anyone who is responsibile for making recommendations for nominees ever check with those who know the movement best first to see if a nominee could truely be supported by the regulated (CUNA and other trades never seem to question a nominee's qualifications ... I know its a political thing, but, it would be refreshing for once if the movement's leaders stood up and said what need to be said once in a while).
    Doug Wolf
  • The Campaigner-In-Chief nominates Decker. The NCUA welcome Decker to the NCUA Board. NAFCU & CUNA both praise, welcome and encourage Decker. Is this the best credit union CEO to nominate? While we are at it let's nominate Bob Burrell, Bob Siravo, and Francis Lee, too. District Government FCU is a hole in the gound. Put a fork in it. Its done. What a sad commentary on behalf of the entire credit union industry and its two (2) trade associations to openly welcome and embrace a nominee with a 4 year history of poor performance. Even hiding behind the credit union tax exemption the credit union still remains unprofitable.
    tony costanzo
  • Who does she know that got her the nomination in the first place?
  • The opportunity is now.
  • least this lady knows something about running a business (gov't) at a deficit!

    NCUA Call Report Data:

    Charter No.: 16411

    12-2007 NEGATIVE INCOME $119,797 ASSETS: $39.9M

    12-2008 NEGATIVE INCOME $369,282 ASSETS: $41.9M

    12-2009 NEGATIVE INCOME $483,946 ASSETS: $42.5M

    12-2010 NEGATIVE INCOME $322,790 ASSETS: $46.3M

    12-2011 POSITIVE INCOME $101,625 ASSETS: $45.9M


  • Well we now know that she was not cutting the mustard and choose to withdraw. We all hope that the next nominee is vetted better than before and I hope they don't live anywhere near Washington DC.