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Markoverdub: Hey everyone.

This is Mark Trankel with another
episode of with flying colors.

I got a special guest today.

It's Lenwood Brooks, formerly of NCOA.

He was the chief staff.

Hey, they change you guys
change the name so many times.

I can't remember what your last
title was, but you were the kingmaker

for board member Rodney Hood.

That's the title.

I would give the chief of staff when
you were when he was the chair and.

And anyway, so Lenwood, let's let,
I'm going to give you an opportunity

to introduce yourself and we'll talk
about, your most recent gig at NCUA.

Lenwood: Thanks for having me, Mark.

It's great to be with you.

I've enjoyed following this
podcast and others in the movement.

You really have a lot of insight
and it's now good to be a guest

now that I've left the agency
after about four and a half years.

Markoverdub: Four and a half years.

Yeah.

So I was there four and a half years
ago, I guess I've been gone three years.

And, , you and I, God rest his soul.

We had a mutual friend, Nick Owens and.

I think, as I recall, , Nick, , may
, have, had some background things going

on relative to, , Rodney coming in and
some advice for Rodney and some advice

for you, because when I was the deputy
executive director back in 2000, Nick

was there in PAC and when you came in.

You came in to PACA, Public and
Congressional Affairs, which now has

a different name, but so let's talk a
little bit about your journey and what

you did there at NCUA position wise.

Lenwood: Nick Owens goes to
show you a lot of things in D.

C.

will go in a circle.

Nick was very influential and it's how I
actually got to know Rodney was through

Nick Owens and his first job in D.

C.

was working for Chairman Dollar.

at the N.

C.

U.

A.

When he was chairman.

But when I came in, Mark, I came
in and I let our congressional

affairs and public relations team.

We had a lot of issues going on.

We were dealing with
the taxicab medallions.

, we were dealing with issues, , and then
we went straight into the pandemic.

But during that time, I transitioned
as well into the chief of staff role.

And now that I've left the agency and
reflecting back, I have a whole new level

of appreciation for the staff, people
like you, you'll have a very hard job.

You were very gifted market managing up.

I've never seen anyone manage up so
well and people genuinely like you.

And that is very important
in the role that you had.

But it's hard for staff.

To train up people like me that came in.

I didn't come in with a lot
of crediting experience.

My experience was limited
to working in other trade

association and also Capitol Hill.

So I had very valuable experience.

The congressional relation side of
things, but I wasn't an expert say

at the time and filled a membership.

There's a lot of really
nuanced things and.

It has to be tiring for staff
to continue to on board.

But I think that's part of the process.

The wisdom of our founding fathers, they
didn't want people to have too much power.

And I think coming in, like I did from
the outside, I think I had a different

way of viewing things independently.

I think into is a great
place to work mark.

So a lot of people they've
been there their whole career.

So they can be I guess my open
can viewing some things because

that's the only way they've known.

I'm not trying to be critical.

I'm just making a statement.

And I know when we first
got know each other, we work

very tireless on the budget.

I asked a lot of questions, but,
I've told this to people again,

and I know some of our career staff
might not like this at NCUA, but if

I could do things again, I would have
tried to hire a political appointee,

Mark, that was full time budget.

Hire someone from the Hill on a
Corporations Committee, because,

the other agencies dealing with
Congress, they're doing budget

is a 12 year, 12 month process.

It's very detailed and oriented.

It gets very, it's a shorter process at
NCA, but I think that's something that I

would have done differently, but I think
we did make a mark on the budget and

speaking of NCA has one before right now.

Markoverdub: They do.

Yeah.

And I always viewed when I was executive
director or deputy executive director, I

viewed the budget as my Superbowl because
you had all the new initiatives of what.

The chairman would want, the other
board members might want, you had

NAFCU, you had CUNA who was interested.

You had staff who was interested because
either they wanted raises built into

it or new positions built into it.

And then of course you, you have the
politics of are we the right size?

Should we shrink?

Should we grow?

Do we need different specialists?

So I truly love the budget
process and viewed it as really.

The culmination of a year and
preparing for the next year.

And I think, your idea of, a special.

Political appointee that deals with that.

I get that because when I, again,
when I was the executive director, I

lived and breathed the budget every
day, all day, and it would always,

culminate in this time of year when
we, they'd have the budget briefing

and then the budget release, the big
reveal which just recently happened.

There was what a 65 page
document that just came out.

Yeah.

Yeah, let's chat a little bit about
the budget process and or your take

on this current budget or where
you might see the budget going in

any way in 2024 and beyond at N.

C.

U.

A.

Well,

Lenwood: there's a saying in Washington
that people are policy, and that's

very true in terms of political
appointees coming in and bringing

their people also the budget's policy.

And I think you can see that in the budget
that's been put out the staff draft.

It's you and I both know Mark, it's called
the staff draft, but it's really the

chairman's draft would be probably a more
appropriate terminology for that budget.

And I think chairman Todd Harper is
clearly laying out his priorities of

where he'd like to take the agency.

And if I was a Fred Union, I'm looking
at the new program for credit unions,

and the staff draft, I believe is three
to $10 billion for consumer compliance.

Beefing up on their lending exams and
like you can clearly see Where todd is

wanting to take the agency and it should
come as no surprise todd has been very

consistent in his positions ever since
he came back to the agency in april

of 2019 todd has been very consistent
in where he wants to take the agency.

So I think in terms of where the NCA is
headed, I think I would look 1st to where

the budget is taking the agency into
2024 and there's a lot of key takeaways.

Markoverdub: Yeah, I, I totally agree
with that on every count, particularly,

Todd's been consistent before, before
he left NCUA when he was back in the

Director of Public and Congressional
Affairs, I could tell he was very

passionate about consumer compliance.

He mentored a group that was looking
at, okay, how can we do better here?

And so that was just a
signal to his interest.

And.

I like to read through 64
pages of documents and pull

out, a few key sentences.

And for example, I, I did
a LinkedIn post recently.

And I've got a guy who works
for me named Steve Farr.

When we get a new credit union
that has a particular issue, he'll

do a word search of keywords.

And so I've always used
keyword search, but.

Steve taught me to embrace this.

So I pulled up that PDF 65 pages.

I typed in safety and soundness,
and I typed in consumer compliance.

And if my recollection is correct,
The budget for 2024 mentions

consumer compliance six times and
it mentions its safety and soundness

once and while in and of itself.

Does it mean anything?

No.

But does it tell you
where Todd's focus is?

Because again, it says staff draft,
but it really is the chairman's draft.

And then along those lines.

Two sentences that popped out
recalibrating exam and supervision for

the 10 to 15 billion to reflect risk.

So that, that references the fact
that one's credit unions used

to have a 10 billion threshold.

They now have a 15 billion threshold.

But when he went into a acted on
that back when you were there acting

on that that shift, they talked
about, still having to do some stress

testing at the 10 10 billion level.

And then the other 1 sentence that
really jumped out at me was right.

Sizing the NCAA exams of
credit union compliance.

With consumer financial protection
laws and regulations, so right, right

sizing consumer compliance kind of
dovetails right into what you said that

there's going to be a bigger footprint.

They're adding specialists in that area.

I'm very curious to see, you know how
that all plays out, but it's credit

unions really need to be, be good
gatekeepers on those regulations because

it's always going to have a bigger
footprint exam wise relative to them.

Lenwood: They are, I think this is
going to be an interesting thing to

watch out, watch as this budget unfolds.

I think the Institute does a good
job on consumer financial protection.

I think we could do more, but
I think it gets to a key point.

A staff member made to me when I
was at the agency, Mark, a credit

union has never failed because
of consumer financial protection.

And of course they have
for safety and soundness.

And I bring that up just to the
environment we're in interest rate,

risk, liquidity, risk, credit risk.

It's an interesting time to be
making a lot of these changes

proposed when we really don't know
what the future holds in 2024.

And it could get messy.

So I look forward to watching
this needle be thread threaded.

I'm confident the board.

Can do that I think the board dynamics
now or it's a highly functioning

board and I think they're going
to be able to find compromise.

Part of the negotiation.

If you come in asking for what you
want, or oftentimes more than what

you want, Martin, or you're going
to land somewhere in the middle.

And I don't know how this
is going to unfold, but I.

I know many times I was the
agency that goes into the process.

Even though the hearing for the budget's
coming up later this month, they're

already working on, in my view, I
don't know this, but they're already

working on the final budget now and
making changes just because it's such

a truncated timeline from the board
meeting after the board meeting is when

they're going to have the open forum for
people, leagues and others to comment.

And then, Okay.

December being the shorter month.

This where the holidays fall
it'll only give a really a, I

don't have the counter for me.

I think it's two or three weeks
mark between that meeting and when

the budget has to be finalized.

And that's pretty quick.

So Yeah.

Yeah.

They're already thread that needle.

Markoverdub: Yeah.

They've gotta be, and as you said, you,
you aim as my dad who was a hunter,

said, you aim high and allow for windage.

So you gotta have a little
bit of fluff in there.

We know there's a little
bit of fluff in there.

What will fall out?

Or will the trades actually, come to
the table and say, Hey, you should do X.

And they'll go, that's a brilliant idea.

We'll tweak it a little bit more.

But you made a really good point
there about About no one's ever

failed from consumer compliance.

You have follow failed
from safety and soundness.

And I had a podcast where I made
reference to the fact that Todd Harper

at the board table talked about my
podcast and the fact that back in the

day when I was a problem case officer,
I had a supervisor was like, I just

want to make sure they're making money.

I'm less concerned with
consumer compliance.

He was a little bit more.

Abrupt than that.

But I, this is a clean a clean podcast
and Todd took umbrage with that.

And I did a, a little mini
podcast on that topic.

But it reminded me also when you
brought that up back in 06, 07,

08, when I was a regional director
for a few years the then chairman.

And the then executive director wanted
to shrink staff, and we had a meeting

with the RDs and you, I appreciate
you appraising my people skills and

ability to manage up, but in that
meeting, it was probably I could have

tapped into my skills in that regard
a little bit more because they were

taking hacks at the field staff budget,
and I was like, the time is wrong

because delinquencies are going up.

Okay.

Asset quality is a problem.

Earnings is a problem.

Capital is going to be a problem.

Why are we doing this now?

The time is wrong.

So here we are and the budget kind of
One of the, one of the budget tricks

is when units go away and you need
more specialists or you want to do

something else, you can let those
generalist examiner positions go away

and then you fund those other positions.

So the budget doesn't go up as much.

And you can see that's one of the
tools that they're using here.

And as you put more people in consumer
compliance or build out an office what's

the office of the executive secretary,
which is getting built out those types

of initiatives cost money, and sometimes
you can fund it by taking away from

the safety and sound aside and the is
the timing right for that right now.

That's a rhetorical question.

You've said, Hey, is the time right?

I think personally, the
time isn't right for that.

And it's going to be interesting
to see where this where the

where and how this plays out.

So

Lenwood: They've got
to thread that needle.

And I do want to say, Mark, although I
did say that no credit union has failed

for consumer financial protection,
that doesn't mean it's not important.

There are a lot of reputational risk,
and quite frankly, it is the law.

So it's important to follow, of course.

But as you mentioned these
are really uncertain times.

And I feel like a lot of credit unions
are waiting for the shoe to drop.

Where's this going to go?

We don't know, but I think
it might not be pretty.

Markoverdub: I think it might not be
pretty and if you and you were there at

every board meeting when they talk about
the insurance fund briefing and one of my

favorite slides is where our camel codes.

It's the one.

It's the one public reveal where you
can see how many camel code there

are at certain levels and that.

The numbers are still low, generally,
but if you look at the trajectory

and the velocity of the increase,
there's more and more threes, fours,

and fives, which means things are
getting a little restless out there.

Enough on, on that side of it.

The, let's talk a little bit behind
the scenes, the there's the sunshine

laws that you and I are familiar with.

You've got three politically
appointed board members.

You've got their executive staff.

The things have to be
done in the sunshine.

So if the board is having a
dialogue or asking questions of

each other, that needs to be done.

So the public can see it and the
only way things can really get

done is people like you Sarah bang.

Catherine Galicia having
conversations about what their

board member might consider.

So behind the scenes, relative
to that, any thoughts you want

to share with the audience on all
the seventh floor really works?

Lenwood: It is.

It is fascinating.

I'll say the Sunshine Act gives the
board advisors a lot of power, more

so than other agencies, because
the SEC, the board members, or the

commissioners can speak to each other.

They have a large number
where 3 is not quorum.

Or 2 or not for him and with 2 being
for him, the board members cannot

speak together 1 on 1 about policy.

So they rely a lot on the executive
director's office, others office,

the agency, but the real shuttle
diplomacy is done by the advisors and.

It means you're an extension of
your boss, even more so since

they can't speak to each other.

I felt like it was my job to
be an extension of Rodney.

I felt like my job was to bird dog
the things he wanted to get done.

It was very important to Mr.

Hood when he went out and about
traveling across the 50 states

to visit with Craig Younes.

It was very important to him to
be accessible and Credit unions

came up with questions about
the Office of Cure and others.

We wanted to get answers.

And we tried to be accessible to
any credit union who came to us.

And I think we did a
good job of that, Mark.

But I think the board is well
served by all three advisors now.

Sarah Bank has a wealth of experience,
too in the credit union industry.

I've seen that play out many
times on final rules the board has

considered, where The experience she
has being on the other side of an

examination table, the experience
she has understanding the business of

PUSOs and Cregions was tremendously
valuable to the work the board did.

And Catherine Galicia, her experience
at CFPB, the Hill, and other places,

she is a loyal soldier to Todd and has
been very effective in managing the

agency to get Todd's priorities across.

But I think there was a respect
among all three advisors and

you just try to get things done.

That's the color I had to
how the seven floor works.

I would be interested to hearing
your thoughts since you were

up there for so long, too,

Markoverdub: Mark.

It's you summarized it real well.

I will tell you that there, the, those
positions have a lot of power and you did

a particularly good job of understanding
what Rodney Hood wanted when he was

chair, when he was a board member and
carrying his water, so to speak to.

enable his vision to be become
part of policy and procedure.

And, we talked, you talked a
little bit about the respect

you gained for staff over time.

I would always gain respect for individual
people for, of the political appointees.

And like you said, it would, it was
challenging for staff to have new

people come in and have to, explain
the federal credit union act and, and

what always happens is NAFQ and CUNA.

Would come in and, they have different
things they want to get through and

they might have general counsel saying,
no, we can't do that, or the executive

director's office saying, yeah, we
could do it, but it's not a good idea.

And so every time there's a change
at the top, that's a new opportunity

for the trade associations to.

influence the new people.

But it's also very healthy because
it's, it creates this, I refer to

this book called the wisdom of crowds
because people come in, you got new

blood, NCA has to explain themselves.

And inevitably there are things that
each staff member, political appointee

like yourselves or our board member, like
Rodney Hood, you'll pose a question in a

way that we hadn't thought of it before.

And it might be.

Something in that whether it's tied
to the field of membership or, the

definition of of in danger of closing,
which allows you to merge credit unions

and over time fact patterns change the
body of law changes and you might be able

to, the internet has a bigger influence
than it did 10 years ago, 20 years ago.

And how does that impact
field of membership?

Yeah.

The new blood at the top of the board
is always questioning NCA staff to say,

Hey, have you thought about it this way?

And sometimes we go, Nope.

If federal credit union acts
as this, it's cut and dried.

You can't do it.

But those conversations do leave
to, we never thought of it that way.

Let's think about it.

And then, it's not, it's, it
doesn't happen super quick.

But during the term of the individual,
you can see changes that where they

can influence the policy where a
regulation that NCA staff would

have said, no, we can't do this.

A year later, it's yeah, we can do this.

And here's a proposal
and it passed muster.

And, so that's the exciting 10, 000 foot
level of having been there as a, as a.

A long time career staff interacting
with the different people that come in.

It is fascinating to see how the changes
can happen in regulations because of the

political appointees that come in and.

For lack of a better term, force NCUA
staff eyes wide open to say, Hey,

might we be able to consider this?

And it's cool when that happens.

Lenwood: You mentioned NCA staff.

I just wanted to say I think for
government agency NCA is very blessed.

They have staff that by and large,
generally believe in the mission of

the agency, but also the overarching
mission of the movement of credit unions.

And I think they really care about.

What they do every day.

I'm not sure.

It's like that elsewhere in government.

I worked on the hill.

That's my only other student government.

So it's not necessarily apples to apples,
but I have to imagine other agencies.

Maybe it could be just a
job to a lot of people.

I could get into a, people by
and large are happy to get up

every day and go to work and.

Almost all the people at the
NCA are really good people

and really love their job.

NCUA is a great place to work and
going forward as the industry continues

to contract, I'll be interested
to watch how this all unfolds.

I think, as much as credit unions
can complain about NCUA, that I

think they're lucky to have the NCUA.

And I think it's critical for credit
unions to make their voice heard about

the importance of having a strong,
independent regulator that gets credit

unions, that are specialized to the credit
union industry, because Credit unions are

not banks, and I think it's critical for
regulators to understand that, and I think

the way the system's set up now, Mark
is very helpful because it is carved out

just to credit unions and not something

Markoverdub: broader.

That's very well said and NCOA does have a
good team and they believe in the mission.

It's a good mission, which I think
makes it easier, with credit unions

play such a great role and can do so
many good things for their members.

That just gets NCUA well
positioned to have to hire good

people because of the mission.

And like you said it's a good team there.

I look forward to seeing where it goes.

Like you said, the
consolidation is a real issue.

Credit unions.

I agree with you.

Toll hearted.

They're fortunate to
have NCUA around because.

The footprint that that FDIC might
have on a credit union hour wise is

substantially different for the same size
type institution, and that's something

that's not really talked about a lot, but.

You take a pick a number 10
billion, 8 billion, 4 billion.

If you look at the time NCOA spends
on an exam versus the time FDIC

spends, I know credit unions sometimes
complain, hey, they're here too long.

The FDIC people are there much longer.

And I think I view that as NCOA being
efficient and focusing on majors.

Yeah I I, as I started thinking
about that, I started thinking

about the consumer compliance
dialogue we already had.

So they may be expanding over
time into that arena as well.

Anya Otsuka is any thoughts
relative to thank you.

Correct me if I'm wrong, she's
had her hearing and that can play

out quickly or that can play out.

A little bit slower and that's where
the politics come in the D's and the

R's and how quickly might that move
any thoughts relative to that you

Lenwood: She's had her hearing.

I would expect pretty soon.

The Senate bank committee
will vote on her nomination.

Once she's voted out, it
will send her to the floor.

Usually after hearing the committee
will see questions for the record.

So it's take some time to.

Compile those, but, at that point,
they'll be, they'll try to broker

a deal for her nomination to
pass by unanimous consent and.

The Senate is a they run by, I was told
by one of my former bosses when I interned

for Trent Lott of Mississippi the Senate
runs by unanimous consent or exaltion.

So there's a lot of arcane procedures
there, but, it's just very hard to

always predict the cadence and rhythm
of the Senate, but I think, todd he is

very smart and savvy and I think just
like how Cal Hauptmann came from the

Senate with the new nominee from the
Senate, I think, that will probably

put her, if I'm guessing, towards the
top of the queue, but it's always hard

to guess the rhythm and cadence of the
Senate, although they have a typical,

reputation for, taking their time.

They like to call it deliberating.

Markoverdub: Deliberating.

Very good.

Very good.

And if you think about that too, all
three, so let's just assume she, at

some point she gets on the board,
all three board members will have

that political background, right?

The Federal Credit Union Act limits.

I might not paraphrase this exactly
right, but there can be 11 board member

that comes from credit unions, right?

And credit union experience.

So there have been credit union
people with credit union experience

on the board in the past.

And this board really won't have that.

Do you see this as a trend that
down the road you'll see the next

that this is where board members
are going to constantly come from?

Or might there be a pivot at some
juncture where, you know, someone who

ran NAFCU or someone who ran a large
credit union or someone who served

on a board, for a long time will find
their way back onto the NCWA board?

Lenwood: It's always hard to predict,
but as I said earlier people or policy,

and that would be no truer statement
than the members of the NCUA board.

I don't think this is unique to NCUA if
you look to the SEC and other regulators.

When he was chairman of Senate
Banking Committee, Senator Shelby

had a long list of alumni at the
SEC and other financial regulators.

And again, I think this trend started many
years ago because You People or policy,

and if you're putting someone on there,
who's your policy advisor, you're going

to understand where they are on policy
when they make it to a regulated entity.

I do think again, it's valuable
having credit union experience.

I mentioned all the insight
the board has gained from Sarah

Baines knowledge in the industry.

I think that's 1 reason while the vice
chairman Houtman I think it was important

for him to have someone who'd been on
the other side of the examination table.

So there's no question that is important.

But I would think this is
a trend, though, of having

congressional staff be regulators.

This is a trend that's been
going on for quite some time.

It's just taken a little
while for it to make it to N.

C.

U.

A.

But I don't see this necessarily.

Changing anytime soon, but at the same
time mark, every nomination is different.

It's really up to the president,
presidential personnel and again

if it's also up to the member of
the other party, the president,

who's a leader of the Senate.

They can be the one to determine who is
the minority representative on the board.

So they have a lot of influence too.

So that's the long way of saying
is the way nominations are made or.

Unique to every situation
and circumstance.

But I do think it's a larger trend of
congressional staff being regulators.

And again, to repeat
myself, people are policy.

And I think that's one
reason why this trend is

Markoverdub: ongoing.

Yeah, that makes sense.

That's that's enlightening.

So I know that Your time
at NCWA is is at an end.

I know that, from the dialogues
I have with staff there and the

time that I spent with you, you're
going to be missed by the staff.

You're going to be missed
by the credit unions.

I know Rodney has someone filling in
board memberhood as somebody Nagi Khalid

filling in for you and those are big
shoes to fill at as particularly at this

time with the budget and everything.

But I want to thank you
for being on the podcast.

Thank you for the things you've
done for credit unions over your 4.

5 years.

And Lenwood, is there any
questions I should have asked

you here today that I didn't.

No, I

Lenwood: think you pretty
well covered it, Mark.

But before we end, I just
want to thank board member and

former chairman Rodney Hood.

He took a chance in hiring me.

Any hiring decision, you take a
chance on someone and he places

full trust and confidence in me
and really just let me get the job

done and be an extension of him.

And it was an honor to serve.

I'm very proud of the record
that board member and Chairman

Hood accomplished in his time.

I think with him going back for
his second tour NCUA, he was able

to make even more of an impact.

And I think, he left
an indelible mark yeah.

At the agency that credit unions will
be thanking him for many years on

Fintech loan participation on what
he did with the QSO rule and others.

I think Rodney has really been a
trailblazer in his time at the NCA,

especially his 2nd tour of duty here
in 2019, but I really enjoyed the

time we've spent together today, Mark,
and I appreciate everything you do.

Markoverdub: You've got it.

Thanks, Linwood.

That's a great summary, and I want to
thank you for being available today

to chat about your journey at NCUA.

My pleasure.

Yes, it was a lot of fun,
a lot of fun catching up.

And listeners, I want to
thank you for listening.

I hope you'll listen again soon.

This is Mark Treichel signing
off with Flying Colors.

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