By Geoff Bacino, CEO, Bacino & Associates
NCUA
President Trump quickly named Kyle Hauptman to be the 14th Chair in NCUA history. As Hauptman is the only Republican on the Board this was not unexpected. Much like when Todd Harper was named Chairman in 2021, Hauptman is in the minority on the Board with Democrats Harper and Otsuka occupying the other seats. One of Hauptman’s first moves as Chairman was excellent – he named Sarah Bang as NCUA Chief of Staff. She has an extensive knowledge of the credit union movement and has served in several top positions at CUSOs and with COOP Financial Services.
Chairman Hauptman put his stamp on the agency when he released his priorities for the upcoming year. Among them are a re-examination of the NCUA budget process, the increased use of AI, removing regulatory barriers to new (de novo) credit unions and leaving the issue of climate risk up to credit unions and their members. Some of these differ from the priorities distributed earlier in the year – those driven by former Chair Harper.
Whichever priority list NCUA focuses on may be of little concern if the White House and the Department of Government Efficiency (DOGE) continue its quest to downsize government and reduce jobs. Starting with US AID and moving onto the CFPB, Elon Musk and DOGE have taken control of independent agencies and either severely handicapped them by removing funding or told employees not to come to work.
A top-to-bottom, 360-degree examination of the scope of government is in order. But make no mistake – that is not what DOGE is doing. It is systematically seeking to eliminate agencies and personnel based on vindictiveness and a partisan bias. The consequences of these actions will be felt for years and may not be able to be undone.
Where is the opposition to this bloodletting? Democrats are not able to do anything as they don’t control the White House, the Senate or the House of Representatives. Democrats controlled the House during the first two years of Trump’s first term, and they controlled the Senate during the final two years of that term. This allowed the Democrats to force the White House to “pump the brakes” on anything that was too draconian. That isn’t the case now.
The Democrats can’t impact any decisions, so the responsibility now falls to the judicial system. However, the wheels of justice turn slowly, and the court system does not have an enforcement mechanism to help impart its judgements. Should the White House choose to ignore a legal decision handed down by a court, what guarantee is there that the decision will be enforced? And by whom?
Financial Regulatory Executive Order
The Trump Executive Order giving the Administration control over independent federal regulators should have garnered more concern than it did. Having to pass potential rules and regulations through the White House does not increase transparency – it decreases the control and oversight of the agency. There was no electoral mandate to change the way that independent agencies work. This is simply a power grab.
It is also not consistent with the intent of Congress when creating independent agencies. There should always be a constructive tension between the regulator and the regulated. To think that having a homogenized financial services landscape where every rule is essentially written by the President is to dramatically misunderstand the value of an independent agency.
Regulatory Consolidation
The concept of consolidating all the financial services regulators is a bigger threat than the Executive Order or possible taxation. The concept of consolidating the financial services regulators poses one, if not the, most existential threats to the credit union system in our times. While the sales pitch for the consolidation could sound good – credit unions can keep their tax exemption, but the regulatory function will be run out of the Treasury Department. The results would be disastrous. The idea that credit unions would be best served by a silo manager who answers to the Treasury Secretary (or the White House) would mean the end of an independent credit union movement.
Taxation would not end credit unions as they are now, but it would result in a restructuring. The tax benefit differentiates credit unions from other financial institutions, but it is not the only thing that makes credit unions unique. Should credit unions lose the tax exemption, the need for a field of membership is diminished; member business lending caps should be lifted; and Boards of Directors might insist on being paid.
Virginia/New Jersey Governor Races
There are just over 600 days until the 2026 mid-term Congressional elections. This will be the Democrats next opportunity to stem the tide that they currently face. Before the mid-terms, the Governor’s races being held this year in Virginia and New Jersey might provide a preview of which party might have an advantage heading into the 2026 elections. If voters feel that Republican policies are going too far, they will look to elect Democrats in those two states. But if they approve of Trump’s actions, Republican candidates in Virginia and New Jersey will be beneficiaries.
Kudos
To SWBC President Joan Cleveland for being named Chair or the Life Insurance Council Board;
To Pennsylvania regulator Stacey Cameron, who was appointed to the National Association of State Credit Union Supervisors (NASCUS) Regulator Board; and to Zeal CU CEO Julie Kreinbring for being appointed to the NASCUS Advisory Council;
To Baxter President/CEO Mike Valentine for being one of the recipients of the Wegner Award. Also being honored are Terri Robinson and Deborah Wege.