J. Mark McWatters

J. Mark McWatters
Chairman of the NCUA Board
Incumbent
Assumed office January 23, 2017
President	Donald Trump
Preceded by	Rick Metsger
Personal details
Born	John Mark McWatters
Education	University of Texas School of Law JD, Columbia University School of Law LLM, New York University School of Law LLM
Website	NCUA biography

John Mark McWatters is the Board Chairman of the National Credit Union Administration (NCUA). He was appointed by President Donald Trump on June 23, 2017, to serve as the tenth Board Chairman of the NCUA. McWatters was previously designated by President Trump in January 2017 to serve as Acting Chairman of the NCUA. In January 2014, President Barack Obama nominated McWatters to serve on the board of the NCUA.

The NCUA is an independent federal agency^[1] that regulates and supervises a system of federally insured credit unions that holds nearly $1.4 trillion in assets. The NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits^[2] of more than 111 million account holders^[3] in all federal credit unions and the overwhelming majority of state-chartered credit unions.^[4]

As NCUA Board Chairman, McWatters serves as a voting member of the Financial Stability Oversight Council.^[5] He also represents the NCUA on the Federal Financial Institutions Examination Council,^[6] the Financial, and Banking Information Infrastructure Committee,^[7] and on the board of NeighborWorks America.

Prior to his service at the NCUA, McWatters had significant experience in public policy issues related to the regulation of financial institutions and alternative investment vehicles, including service as a member of the Troubled Asset Relief Program Congressional Oversight Panel.

Education

McWatters received a B.B.A. from Texas Christian University, an M.B.A. from Michigan State University, a JD degree from the University of Texas School of Law an LLM from Columbia School of Law and an L.L.M. from the New York University School of Law.^[8] McWatters is also a Certified Public Accountant in Texas.^[9]

NCUA

As NCUA Board Chairman, McWatters heads an independent federal financial institutions regulator that charters, regulates, and supervises almost 3,500 federal credit unions. The NCUA also administers the National Credit Union Share Insurance Fund, which insures more than 111 million credit union member accounts at more than 5,500 federally insured credit unions. ^[10] The Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States.^[11]

Chairman of the NCUA Board

President Donald J. Trump designated J. Mark McWatters as Acting Chairman of the NCUA Board on January 26, 2017, and then as Chairman on June 23, 2017. ^[12] McWatters succeeded Rick Metsger, who had been designated Board Chairman by President Barack Obama in May 2016.^[13]

Under McWatters’ leadership, the agency has taken on a number of initiatives, the most significant being closing the Temporary Corporate Credit Union Stabilization Fund prior to its scheduled expiration in 2021.^[14]

The Stabilization Fund was created in May 2009 to minimize the losses associated with the collapse of five corporate credit unions—Constitution, Members United, Southwest, U.S. Central, and WesCorp— during the financial crisis nearly a decade ago. The Stabilization Fund was used to account for the costs of the NCUA’s Corporate System Resolution Program ^[15] and to provide both short- and long-term funding to resolve the legacy assets of the failed corporate credit unions, which consist of residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, and corporate bonds. Under the Corporate System Resolution Program, the NCUA also created a re-securitization program in which the agency issued a series of NCUA Guaranteed Notes ^[16] that were sold to investors to provide long-term funding for the legacy assets.

From 2009, when the Stabilization Fund was created, until 2017, the value of the legacy assets improved and the NCUA pursued litigation that won more than $5.1 billion in gross recoveries from banks and investment firms that had sold faulty securities to the five corporate credit unions. ^[17] These recoveries were used to repay the agency’s outstanding borrowings from the U.S. Department of the Treasury during the financial crisis. ^[18]

Given the overall success of the Corporate System Resolution Program, the NCUA’s legal recoveries, and improvements in the value of the legacy assets, McWatters proposed in 2016 the agency close the Stabilization Fund four years ahead of its scheduled expiration in 2021. ^[19] The NCUA Board voted unanimously at its September 2017 open meeting to close the Stabilization Fund and to merge its remaining assets and obligations into the Share Insurance Fund, as required by the Federal Credit Union Act. This action resulted in a distribution of $736 million to eligible federally insured credit unions in the third quarter of 2018. ^[20]

As Chairman, McWatters led the agency’s first large-scale restructuring initiative in more than a decade, to meet the changing demands of the credit union system. ^[21] The initiative consolidated the agency’s five regional offices into three and eliminated four of the agency’s five leased facilities. ^[22] It also eliminated overlapping responsibilities within the agency’s offices and improved functions such as records management and procurement. An enterprise risk management program was also formalized to better align strategic directives, identified agency risk, and budgeting at a macro level. ^[23]

The initiative coincided with Executive Order 13781, directing agencies to improve their efficiency, effectiveness, and accountability. The NCUA was the first federal financial institution regulator to begin such an initiative.^[24]

McWatters focused the NCUA’s efforts for greater transparency in its budget process, including posting budget information online, soliciting public comment, and holding a public budget briefing for the 2017/2018 and 2018/2019 cycles. ^[25]

During McWatters’ tenure as Chairman, the NCUA Board approved rules providing greater transparency and accountability to credit union members during voluntary mergers, providing better due process for credit unions appealing supervisory decisions, and improving the appeals process for agency program decisions. ^[26]

McWatters also advocated for regulatory change that would expand how credit unions define their fields of membership. ^[27] In his June 2017 congressional testimony. McWatters suggested Congress should allow credit unions to serve communities that exist only online to better reflect today’s society. ^[28]

NCUA Board Member

McWatters was nominated to the NCUA Board by then-President Barack Obama on January 7, 2014.^[29] Following Senate confirmation, he took office as an NCUA board member on August 26, 2014.^[30]

He succeeded former Chairman and NCUA Board Member Michael E. Fryzel, who left the NCUA Board on August 26, 2014.^[31]

As an NCUA Board Member, McWatters supported exploring policy options for expanding access to secondary capital to all credit unions, authorizing supplemental capital for all credit unions, and including alternative capital in the calculation of the agency’s risk-based capital requirements. In January 2017, McWatters called for the credit union industry to provide a “wide spectrum of comments as possible” on the issue. ^[32]

McWatters has also focused on matters of regulatory relief. In his remarks before the Credit Union National Association’s 2017 Governmental Affairs Conference, McWatters encouraged the agency to “revisit the risk-based net worth regulation and other needlessly burdensome rules.” ^[33] McWatters supported a second comment period to re-examine the risk-based capital issue saying, “NCUA does not possess the legal authority under the FCUA to adopt a two-tier RBNW regulatory standard."^[34]

McWatters also advocated for an open and fair exam appeals process that provides credit unions with an appropriate level of due process, ^[35] longer examination cycles, ^[36] and additional flexibility for credit unions as it relates to field of membership. ^[37]

Financial Stability Oversight Council

As Chairman of the NCUA Board, McWatters serves as a voting member on FSOC. ^[38] Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, FSOC identifies risks to the financial stability of the United States, promotes market discipline, and responds to emerging risks to the stability of the United States' financial system.^[39]

Federal Financial Institutions Examination Council

McWatters serves on FFIEC as one of five federal financial institutions regulators ^[40]. FFIEC is responsible for developing uniform reporting systems for federally supervised financial institutions, their holding companies, and the nonfinancial institution subsidiaries of those institutions and holding companies. It conducts school for examiners employed by the five federal member agencies represented on the council and makes those schools available to employees of state agencies that supervise financial institutions.

Financial and Banking Information Infrastructure Committee

McWatters also serves on FBIIC, a Presidential Committee charged with improving coordination and communication among financial regulators, promoting public-private partnerships within the financial sector, and enhancing the resiliency of the financial sector overall. ^[41]

Prior Service

Prior to joining the NCUA Board, McWatters served as the Assistant Dean for Graduate Programs and as a Professor of Practice at the Southern Methodist University Dedman School of Law and as an adjunct professor at the Southern Methodist University Cox School of Business. He also served on the Governing Board of the Texas Department of Housing and Community Affairs and the Advisory Committee of the Texas Emerging Technology Fund. ^[42]

Previously, McWatters served as a member of the Troubled Asset Relief Program Congressional Oversight Panel and as counsel to U.S. Representative Jeb Hensarling (R-Texas).^[43] Earlier in his career, McWatters was a tax and corporate counsel at HBK Capital Management LP. He was a partner at Patton Boggs LLP and Fulbright & Jaworski LLP, a partner and associate at Hughes & Luce LLP, and an associate with McGinnis, Lochridge & Kilgore LLP. He served as a judicial clerk for Judge Walter Ely of the United States Ninth Circuit Court of Appeals from 1982 to 1983.^[44]

References

Further reading

1. "Trump removes 'acting' from NCUA Chairman McWatters' title". Credit Union Journal. June 27, 2017 . Retrieved 2016-05-02
2. "Metsger Appointed NCUA Chairman" (Press release). Alexandria, Virginia: national Credit Union Administration. May 2, 2016 Retrieved 2016-05-02
3. "Obama to Nominate Mark McWatters to NCUA Board". Credit Union Times. December 18, 2013 http://www.cutimes.com/2013/12/18/obama-to-nominate-mark-mcwatters-to-ncua-board
4. "Senate Approves McWatters to NCUA Board of Directors". Credit Union Journal. June 19, 2014. https://www.cujournal.com/news/senate-approves-mcwatters-to-ncua-board-of-directors
5. "McWatters Takes Oath as New NCUA Board Member". Credit Union Times. August 26, 2014 http://www.cutimes.com/2014/08/26/mcwatters-takes-oath-as-new-ncua-board-member
6. "White House Nominates Republican to Export-Import Bank Board. The Wall Street Journal". January 11, 2016 https://www.wsj.com/articles/white-house-nominates-republican-to-export-import-bank-board-1452549036
7. "Shelby: No Plans to Move McWatters to Ex-Im". Credit Union Times. March 15, 2016 http://www.cutimes.com/2016/03/15/shelby-no-plans-to-move-mcwatters-to-ex-im?page=1&slreturn=1496772222
8. "McWatters Takes Oath Joins NCUa Board" (Press release). Alexandria, Virginia: National Credit Union Administration. August 26, 2014. Retrieved 2017-07-13 https://www.ncua.gov/newsroom/Pages/NW20140825McWattersOath.aspx
9. "McWatters' TARP Past: NCUA Board". Credit Union Times. January 8, 2014 https://www.cutimes.com/2014/01/08/mcwatters-tarp-past-ncua-board