Credit Union Exam Solutions Presents With Flying Colors

Treichel: Hey everyone.

This is Mark Kel with an urgent emergency
episode of With Flying Colors, and it

relates to President Trump firing Todd
Harper and firing Tanya Ska two days ago.

Today is I.

What is today?

Today is Thursday the 17th.

The 15th.

They were fired by email.

I'll get into that.

I'm going to share my PowerPoint
slide that I've put together for this.

I'm chatting with some
league organizations and

associations across the country.

If you are with a league and you'd
like to have me chat with your credit

unions, feel free to reach out.

I've called this PowerPoint what's
the sound of one hand clapping, which

is a reference to a Van Morrison
song, and we now have one NCA board

member whose hands will be clapping.

But I digress.

So the topics I wanna walk through
is the fact that Harper and Otsuka

were fired and what that means.

I wanna walk through what Chairman
Kyle Hetman can act on in my opinion.

I'm gonna walk through n NCAA's
downsizing efforts, and I'm gonna

walk through some things relative to
agency consolidation, that's banking,

agency consolidation and taxation.

So what happened?

The White House sent out a statement
and its statement says The White

House has defended the firings with
press Secretary Carolyn Levitt stating

the President Trump that President
Trump is the chief executive of

the executive branch and reserves
the right to fire anyone he wants.

This move follows a similar
action In March when Trump

removed Democratic Commissioners
at the Federal Trade Commission.

That's from the right,
that's from the Act door.

Donald Trump, Senator Warren stated,
the ranking member of the Senate

Banking Committee from the left
criticized the action as the latest

attempt by Trump to skirt the rule of
law, undermine independent agencies

and illegally purge the government of
those who work for the American people.

So can President Trump fire.

A board member prior to a term end.

By the way Robert Swan sued President
Clinton long ago about whether or

not Clinton could fire Robert Swan.

But Robert Swan's term had already ended,
and it was concluded that he could, in

this instance, there were terms left
for Otsuka and for Harper there is a,

supreme Court decision that may apply.

People are saying it applies.

You be the judge.

And the reality is I'm getting texts about
some things going on at NCUA as we speak.

All right?

That's from outside the NCUA.

Some things that some people
outside are NCUA are hearing.

I've got people that tell me stuff.

I hear stuff from people who work
for me who have contacts at NCA.

I conclude things based on my intuition,
having been at NCA for 34 years and

run NCUA for eight of those years.

In any event, I digress.

Can president, can the president
fire prior to the term add?

There is a Supreme Court case out
there that indicates that he may

not be able to, and it's, here's
what some of what that says.

Hump Humphrey's executor
versus the United States.

1935, this unanimous Supreme
Court decision held that.

The president could not remove a
Federal Trade Commission members

simply for political differences.

The court distinguished between executive
officers and quasi legislative or

quasi-judicial officers ruling that
the latter could only be removed with

procedures, consistent with statutory
conditions and acted by Congress.

So was this for political reasons?

You can argue yes.

I don't know what the termination said.

They probably didn't say that.

They probably said for performance
or something, or they were silent.

But that we don't know what they said.

We don't know if the facts apply to this.

You can argue that they may,
you can argue that they do.

I'm not here to take that position.

And of course, everybody has the right, if
their due process is not followed to sue.

I've heard that.

I've not heard from anybody who was
fired, meaning Harper or Otsuka, but

I've heard some people say they think
they will sue and time will tell.

So this is some things that I think
are relevant if you're looking at

what has happened here recently at
NCUA and I call this slide time that a

timeline of truth, rumor and intuition.

So there, there are things
here I know to be true.

There are things here I've heard from
rumor firsthand, secondhand thirdhand,

and there's things based on my intuition.

Again, I ran NCUA for eight years.

I worked in the office of the executive
director for 11 and a half years longer

than anybody ever in the history of NCUA.

I understand what's required of the
board, what's required of staff,

how the act works, et cetera.

So there's things I can fill in
holes, I can hear three or four

pieces of information and help.

That helps me conclude.

Four, five, and six, and
that's what I'm doing here.

Some of these again are truth, some of
'em are rumor substantiated potentially,

and some of it's my intuition.

So February 20th, 2025, the NCA
Board agenda comes out and it

indicates that they're going to
vote to select a vice chairman.

That Vice Chairman was going
to be Todd Harper, a Democrat.

It's my understanding that on
February something or other, sometime

be between the 20th and the 26th,
Halman was told not to designate not

to designated Harper as vice chair.

What else was said in that
conversation or communication?

I don't know, but I have it from
pretty good sources that did happen.

February 26th, the vice chairman
item disappears from the NCA agenda.

It may or may not have disappeared in
violation of the Sunshine Act because

it just came off their website.

There was no notification sent out
publicly about it being canceled.

The paperwork may have been in process,
and I guess if the president calls and

says, do it, you do it, and you clean
up and you ask for forgiveness later,

but I do not believe they followed
the Sunshine Act and pulling that off.

But regardless.

March 3rd during GAC, Halman changes
NNC a's position on NSF and overdraft

collection, and he does it at
G-A-C-N-C-A Board members typically

like to make a big reveal at GAC.

His reveal was billion dollar credit.

Unions would not have
to report overdrafts.

Would not have to report
overdrafts individually.

They would collect it and they
would talk about it in generalities.

But credit union a that has
overdrafts of this amount would

not be out in the public eye.

Ska and Harper had voted
to require that previously.

March 11th.

Harper and Ska both issue, separate
statements against what Helpmann

did, talking about what's wrong with
transparency and other things, saying

that this information should be out
there, it's banks are required of it.

Why are we hiding from this information

March 12th?

There's a closed meeting and it falls
from the sky saying we did not have time.

There was no opportunity
for earlier public notice.

And that was relative to the
NCAA's Agency downsizing plan.

They didn't call it that in the paperwork.

They called it personnel, and
that's how you exempt something

to be on a closed meeting item.

By the way, back when I was at NCUA.

You typically would have
three types of board actions.

An open item, a closed item, or
a notation, vote item, a notation

vote item could be either something
that would've been open or closed,

but is more routine nature, where
the board automatically agrees.

And you would do some of those things via
notation vote, but something could be.

One board member could say, I don't
want this to be done by notation.

Vote and drag something
to a board meeting.

You could have a vote, a two to one
on a notation vote and they could

agree to vote no on it and then just
move forward and not have to do it

on the recorded record of the agency.

And that's.

Recently the board members
have been doing that.

It's quicker, it's faster, it's less work.

It's a lot of things, but they have been
not been doing a closed board meeting.

I haven't had a chance to go back
and look when the last time they

actually did one was, but they
do most things by notation vote.

So out of the sky falls out,
we're gonna vote on this plan.

I understand they had a very long meeting.

I understand they did not vote on it, and
their plan was due to OPM the next day.

March 13th.

It's my understanding they
did not submit a plan.

I believe that it's very possible that
board member Helpmann tried to go get

this through on notation vote, and
one of the other board members or both

said, no, we're gonna meet on this.

That may or not may not have
happened, but since they've had zero

closed board meetings in several
years, I believe that to be true.

Alright, so they didn't submit the plan
by March 13th, March 21st, there was a

follow up closed meeting on the downsizing
plan, OPM, restructure plan required by

President Trump, whatever you want to call
it, and there was a vote to approve it.

It could have been a three oh vote,
it could have been a 2 1 2 1 vote.

Board member.

Todd Harper always tries to reach
consensus in anything he does, and I

believe he probably did vote for it.

I don't know what SKA did, but if there
was a two one vote, I would bet that

SKA was the one who voted it down.

Again, intuition April 10th and
Sue announces an April agenda where

they're going to do a briefing.

On the disaster rule to help California
because of the fires that happened there,

and a briefing on the downsizing plan.

Again, they call it something else,
but it's a plan to downsize, and they

announced on April 10th with the seven
day notice that they would do that.

That would've been last Thursday,
April 10th, on or about.

I hear rumors that Doge
has arrived at NCUA.

April 10th or about, I hear rumors that
the Doge is upset with and is displeased

about the lack of people in the building,
implying that they are violating Trump's

desire to have efforts to return to work.

Now, I understand and believe that nsu a
negotiated things with their union that

did not need to be negotiated about.

Working from home.

But they did do that.

And I believe NCOA said we're
complying with our contracts.

So whatever they did, they either
renegotiated, they had some

level of requirement to come in.

I think they learned from the pandemic
that working from home can work, but

that they were bringing people back.

But allegedly Doge wasn't happy
with how this all was working out.

April 15, Harper and ska fired via email.

I say via email 'cause I saw a press story
indicating that's what SKA indicated.

April 16th.

There's a lot of chatter coming outta
the agency and with people I know that

are outside the agency that Harper
and Ska are fired, essentially not

necessarily with those words, but
implying that they're about to be or were.

And rumors that Instagram will
be canceling their board meeting.

And then late in the day on the
16th, the board meeting was canceled.

Did Halman cancel that because he
didn't wanna do the briefing solo,

or was he told by the White House to
cancel that brief, that board meeting?

I don't know.

What can help men act on as their primer?

The Federal Credit Union Act
says that the you can, the board

can only act with a quorum.

They can't act without a quorum
and a majority of the board

shall constitute a quorum.

You can find support that says a quorum
of a board is two and is never one.

And you can argue that if there's only
one board member that a quorum is a one oh

vote you decide, or the courts can decide.

However, there's some history here.

And oh, by the way, on April 16th,
America's credit unions, the Trade

Association came out and said, under
the Federal Credit Union Act, without

at least two members on the board, the
NCOA is unable to implement any new

action, but the agency can still perform
its supervisory and examination duties.

So they're viewing that act is
saying you need a quorum, and a

quorum is not one, in my opinion.

I think that's their interpretation here.

Let's look at history though.

In 2000, I was the deputy
executive director for a board

that was Damore Wheat and Dollar

2001.

Bino came in on recess and it was Bino
and dollar and wheat at one juncture, and

then it was just dollar for two months.

January of oh two and February of oh two.

In March of oh two, Joanne Johnson
and Debbie Matts were both confirmed

and it became board members
with dollar on the same day.

So there were two board meetings
where there was only one board member.

I remember in the time, at the time, based
on discussions on the seventh floor with

Skiles and Bob Fenner, that there was a
legal opinion that Fenner had put together

the late Great Bob Fenner and that it
concluded that a board of one cannot act

as, that does not constitute a quorum.

It may also have said, you could
argue that if it is a quorum, that

you could act if something was urgent.

But that if board members are coming
quickly, why would be the, what would be

the point of proposing a rule and then
having that rule finalized and having

someone challenge it on a technicality of
one board member not being able to act.

And my recollection is.

That was the first of many of the
N-C-U-S-I-F Insurance Fund briefings.

Chairman Dollar did a briefing on the
insurance fund in one of those board

meetings and a briefing on something else.

'cause the board member can be briefed in
public at a minimum at if there's no vote.

By the end of that year, there was a
change to NCAA's delegations, which

said that the granting authority to
carry out any essential function of the

NCA Board when there's only one board
member currently serving on the board.

That was put in place in 2002 and
it was revised in May of oh five.

Now.

What trumps what?

No pun intended.

The Federal Credit Union Act overrides
the delegation approved by the NCA Board.

So if you believe that the Federal Credit
Union acts as a quorum is required in

aqua, and you believe that a quorum is
more than one that would be one decision.

If you believe that a board of one could
act under what this delegation is saying

on something that's essential, and both
could be true theoretically, maybe.

You could argue that there are
things that Helpmann can do

if it's defined as essential.

And going back to America's credit
union's definition or position, they would

view the exam as essential, as would I.

So what is the definition of essential?

Essential is absolutely
necessary or extremely important.

That's not n NCAA's delegate definition.

It's not the Federal Credit
Unions Act definition.

It is what I found when
I Googled the definition.

Okay.

So a regulations essential
maybe is the budget essential.

You need to have a budget because
you need to collect the dollars.

However, NCA, when they approve
their budget, they have a two year

budget and so they have a budget.

You could argue that is not essential
live with the other budget, and

Helpmann could control spending of the
dollars by saying what he wants done

or doesn't want done, or his other
delegations that give him power, so

they don't necessarily need a budget.

I would argue they don't have to have one.

He can control the agency in that way.

What about appeals?

Those are rare.

Would that be essential?

Maybe.

What about conservatorships where NCA
removes the board and serves as the board?

Maybe it's my opinion that whatever
Houtman decides to do, credit unions

in general will be okay with it
because it's gonna be deregulatory

to quote one of his priorities.

Which I think is consistent
with a lot of things.

He said.

NCA should be mindful that the only
people who think compliance is easy

are those who don't have to do it.

So whatever he does is not gonna
make things harder on credit unions.

Therefore, I don't think credit
unions will sue regarding it.

Doesn't mean somebody else wouldn't.

Okay.

On to downsizing and the impact on NCUA.

When you have staffing problems, exams
become the only important thing, the

excuse me, while I wet
my whistle, if you will.

Exams become of paramount my exam of
code five becomes, becomes before a code

four becomes, before a code three become
comes before a two become comes before.

A code one, but exams are already slow.

NCUA changed their policies, allowing
to elongate billion dollar plus credit

unions in part to give some regulatory
relief, but also import part to try

to comply with their own policies.

Helpmann two years ago made a point
saying we can't do our own exams on time.

And I hear from credit unions saying,
you're giving me my old exam the same two

days before you come in for the new exam.

And I've had.

Conversations where I can
confirm that has happened.

So exams are already slow.

They changed policies to help partially
with the purpose of helping, and now

they're offering buyouts and triggering
retirements anywhere from 12 to 18.

20% of staff, I believe their
goal, from what I've heard,

is to get to below a thousand.

They're losing executive level staff.

They're losing supervisory
examiner staff, and they're losing

material amounts of specialists.

They're losing a lot
of corporate knowledge.

So what happens when exams come first?

Things that come second would be mergers.

Things that come third
would be bank acquisitions.

Oh, by the way, if their delegations of
authority apply and you are bigger, the

transaction is of more than $500 million.

That requires the NCA Board to act.

Can the NCA board back Act is this, would
that acquisition be considered essential?

All things to think about
field of memberships, those are

housed separately, so to the.

To the point that there were
staffing changes in the Office of

Cure, field of membership could get
slowed down, but not any more so

as being reprioritized over exams.

Unless they take field of
membership people and have them

start doing exams and appeals.

What will happen on the chain of
appeals, typically they use their

clock on those anyway and they have
timelines they have to reply on.

But again, can a board of one act
on appeal, is that appeal essential?

NCA staffing, their 2025
budget was for 1,247 staff or

full-time equivalents, FTEs.

They have apparently a document, I haven't
seen it, I've heard it referred to, but a

document that goes out in the honor of tra
in the name of transparency to NCA staff.

I have heard that 172
have accepted offers.

That's about 13.7%.

I have heard that the agency is
trying to get below a thousand

because that's a good soundbite to.

Say, Hey, NCA is complying,
we should be kept separate.

I have heard that one region may have
zero associate regional directors

left, and I have heard that they
may be losing half of their ses.

I heard that second or third
hand, not directly from nnc NCA.

So if there's anybody at NCA saying.

Why is somebody talking to Mark?

I didn't hear all this
stuff from somebody at NCA.

I have people out there that are good
sources that gimme information and

sometimes I do hear things from NCA
and sometimes again, it's intuition.

I tend to put things in here if
I heard 'em from somebody else.

'cause I don't wanna get anybody in
trouble if they're telling me things.

And generally that's how
I handle these things all.

Regulatory consolidation.

Where are we at relative to
re regulatory consolidation?

The head of the banking committee, Tim
Scott, said that they were looking at

potentially merging the regulators.

Treasury.

Secretary Besson said he's not interested
in merging the agencies, and then

later he came out recently saying he'd
rather control by FS o and by having

more definitions around the definition
of safety and sound, that's all good.

NCA has a seat at the table at FS o.

Hopefully what Bessant is saying
is what plays out, but with all

the shenanigans or the actions,
whatever you wanna call 'em,

getting down to one board member.

Could trigger people thinking that this
might be something that they want to do.

And even though those folks didn't
mention NCUA, you have to believe

it's just because of an oversight that
NCUA is at the kids' table sometimes

in these conversations that they
would be swept in to all of these.

Organizations, it's possible all the banks
would be won and would be kept separate.

But it's also possible this never happens
because it would take an act of Congress.

So there's things that Trump can
do where he appoints one person

to be in charge of two agencies.

In my mind, if there is consolidation,
it's gonna be in this constructive

consolidation where maybe Rodney Hood,
who used to be at NCOA, who is at the OCC.

Maybe Rodney Hood will be
in charge of OCC and NCA.

How would that happen?

Haman's term is up in August.

Halman could leave, Halman could get
fired because the White House is upset

with him wanting to make Harper Vice
Chair, who knows Halman could go work

at another agency to do something.

They could reassign him over there.

A lot of things could happen
if there's consolidation.

I don't think they have the votes.

From the R'S and the D's, I think
it would be more of one of these,

we'll have more than one person
running other organizations.

And if that's the case,
hopefully that would be Hood.

'cause he understands NCUA.

He's been there twice and I believe
he believes in credit unions.

So that if there's going to be
somebody other than an NCA Board

member running NCUA, I would hope
that it would be Rodney Hood.

Republicans raise this every time
they come in the White House.

For the 40 years I've been
involved with credit unions,

every time there's a Republican.

In the White House, they talk about the
possibility of consolidation, taxation

I'm not gonna go into great detail
here, but could that be on the table?

Sure, it could.

But that again, would
take a vote in Congress.

And can they get that?

The problem is they talk about
the two things you don't wanna

see made are law and sausage.

'cause they're both ugly.

That could be done in the
middle of the night, hopefully.

Hopefully that doesn't happen in
credit union's, lobbying efforts

and Americans telling Congress
individually when they hike the hill,

how important credit unions are to them.

We'll keep that at bay.

Here's a recent release from Rodney
Hood where he said he was going to

combine the midsize and community
bank supervision and large.

Bank supervision programs into one.

So he is consolidating things.

FDIC is consolidating
things you could argue.

That maybe NCRA would say, Hey,
we don't need the Office of

National Exam and Supervision.

It used to be in the region.

Let's collapse that.

We have 20% vacancies.

We need to do triage.

I'm sure there's discussions on
how they're gonna get things done.

However, to get rid of the Office
of National Exam and Supervision,

that would take a board vote.

The establishment of the Office
of National Examined Supervision

is in a regulation, and there
are regulations that tie to that.

So Helpmann would have to do that on his
own, or there would have to be somebody

appointed by Trump to come in and they'd
have to put in one R and 1D and then

they would have to take those actions.

So stay tuned on what might happen there.

As far as examinations and supervisions,
I believe if ultimately there were

consolidations that the, all other
things being equal, every agency

is downsizing, but you look at the
current staff footprint, the data

shows that the same size bank gets 1.35

hours of examination time per year
compared to one hour of credit

union time said another way,
a billion dollar credit union.

Compared to a billion dollar
bank, that bank will have 35%

more exam hours charged on it.

Again, that's all things being
equal with the footprints different.

But ultimately you get out 5, 10, 15
years, if there was a consolidation

of all the banking regulators, I
believe that credit unions would

have more of an exam present.

There would be bank-centric examination
matrix applied, as I'm saying,

and that the loss there would be
a loss of credit union specific.

Regulatory approach.

I believe the insurance
funds would be merged.

I believe credit unions would
likely ultimately be subject to CRA.

And by the way, credit unions count
their insurance fund 1% of it on their

assets, and as a result, they have
1% more requirement on risk-based

capital and prompt corrective action.

So if they collapsed all those, that 1%
would be written off and then they would

be required to have 1% less capital.

'cause that is built into the ratios.

All right.

Here's my contact information.

Here's my team.

You can reach me@marktri.com.

Please listen to the podcast.

Follow us.

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I also have a second podcast called
Credit Union Regulatory Guidance

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hosted by Samantha Shares,
shares as in share deposits.

And again, that is ai.

It's like an audio book of guidance,
although I'm not expecting a lot of

guidance these days, so I've been.

Issuing recently some things that
OCC put out that is really stellar.

There's my LinkedIn contact,
there's my email address, and this

is my team of folks that helped
me with my credit union clients.

That's it.

From here, I'm going to click stop
sharing and we're gonna come back here.

I appreciate you listening.

I'll try and get this out today.

Got a client call coming up.

I got another league call.

Tomorrow at least one next week.

If you are listening and you're
from a league, or you would like

your league to have me present
this to you feel free to reach out.

All right.

Have a great day.

Thank you for listening.

Hope you listen again soon.

Mark reel.

Signing off with flying colors.