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NCUA Board nominee Kyle Hauptman testified before the Senate Banking Committee Tuesday and previewed his top three priorities for the NCUA if he were to be confirmed. Hauptman was nominated to the NCUA Board by President Donald Trump last month to replace Board Member J. Mark McWatters, whose term officially expired in August 2019.

Hauptman's first priority: Managing the fallout from the current pandemic and economic crisis. Hauptman explained how he plans to work with credit unions, the NCUA Board and Congress to search for solutions for those facing financial stress during this time. In his comments at the hearing, Senate Banking Committee Ranking Member Sherrod Brown, D-Ohio, also commended credit unions' efforts to help members impacted by the pandemic; NAFCU has consistently shared with lawmakers credit unions' efforts and how Congress and NCUA can provide additional relief.

For his second priority, Hauptman explained his vision for the expansion of technology’s role, including expanding financial inclusion.

“The pandemic created a test case on how many things, such as this hearing, can be done remotely or online,” said Hauptman. “If we recall the litigation years ago about Blockbuster Video’s late-fees and market dominance, the ultimate solution was American startups like Netflix. While this analogy doesn’t perfectly align with credit unions, I’m convinced innovation can provide more inclusive financial services.”

Referencing the 2008 financial crisis, Hauptman said his third priority would be aligning incentives. Specifically, Hauptman pointed to the NCUA’s less-frequent exam cycle for credit unions that score high marks on their NCUA exams under safety and stability. This policy, Hauptman noted, lets regulators focus more on problematic credit unions and promotes a policy “where safety and soundness are well-aligned with serving members.”

Following his opening remarks, Hauptman faced questions from the committee on topics such as his commitment to fighting high fees, his views on the current expected credit loss (CECL) standard, and whether he had any goals for distributed ledgers and cryptocurrencies if confirmed to the NCUA Board.

On CECL, Hauptman said his priority is capital and acknowledged that in times of crisis, the standard could give the appearance of poor capital levels or balance sheets when expected credit losses are taken into account, despite credit unions having as much capital on hand as they did before the standard.      The NCUA plans to propose a rule soon outlining its three-year phase-in plan, similar to what community banks have. NCUA Chairman Rodney Hood recently urged the Financial Accounting Standards Board (FASB) to exempt credit unions from the standard.

When asked by Sen. Bob Menendez, D-N.J., about how he plans to approach diversity, equity, and inclusion (DEI) in the credit union system, Hauptman responded that the NCUA must “enforce the laws on the books, the Fair Housing Act, the Equal Opportunity Act, and the Fair Credit Reporting Act.” In addition, he noted there is “no entity like the NCUA, or a credit union, or the country, that can fully succeed unless we make use of all the talent around us.”

DEI is a priority for the NCUA; Hood has been vocal on increasing financial inclusion and NCUA Board Member Todd Harper recently gave an update on those efforts to NAFCU member credit unions.

Hauptman currently serves as economic and policy advisor to Sen. Tom Cotton, R-Ark. Hauptman also served on the 2016 Presidential Transition Team, the U.S. Securities and Exchange Commission's Advisory Committee for Small and Emerging Companies from 2015-2016, and as policy advisor for financial services during Mitt Romney's 2012 presidential campaign.

Hauptman’s prepared testimony is available here.

The committee on Thursday also heard from Hester Peirce and Carline Crenshaw, who have both been nominated to be a Commissioner of the Securities and Exchange Commission (SEC). It will hold another meeting to vote on the nominees; if approved, they will advance to the full Senate for confirmation.