Credit Union Exam Solutions Presents With Flying Colors

Hey everyone.

This is Mark Kel with another
episode of With Flying Colors.

You're either listening on your favorite
podcast app or you're watching on YouTube.

Today I am going to have a podcast about.

The Donald Trump firing Tanya Otsuka
and Todd Harper, and the ramifications

that is having on NCUA and which
triggered a couple letters coming from

Elizabeth Warren and Maxine Waters.

I.

Kyle Houtman.

First it a letter to the N-C-A-I-G
and talk about good timing.

NCAA's IG retired just before
this letter came out, and they

have a person that is the acting
ig who had to respond to Warren.

And then when they got that letter
that triggered a letter from Warren

to NCA Board Chair Kyle Halman
about the state of affairs at NCUA.

Without further ado, oh, by the way
and the devil's in the details and

the devil is in the footnotes, so
there's some really good footnotes

here that I'm gonna dive into.

I'll just kinda walk through
the letter here and give my

commentary as I go through it.

Kyle Halman.

Dear Chairman, Halman, we write today
to request information regarding the

operation of the National Credit Union
Administration and CA Board In the Wake I.

Of the illegal firings of the NCA Board
members, Todd Harper and Tanya Ska.

Specifically, we seek clarification on
the board's legal authority to conduct

standard NCA business in the absence
of a quorum and request additional

documentation to better understand
the NCA board's recent actions.

So here they're saying it was the
illegal, that's to be determined.

That's the position Har
Harper notes gonna have taken.

We'll see what the judges say, but
they want some information about

the actions that have happened.

And I've got podcasts on this.

We'll walk through it again here 'cause
there's some updated information.

We now have a list of what
actions they actually took.

And next paragraph.

Despite the critical importance of
a fully staffed board to the NCA

operations President Trump unlawfully
fired NCA Board members Todd

Harper and Tanya Ska on April 16th.

As a result, you are the only
board member remaining at the NCA.

In response, we wrote to the NCA
Officer of the Inspector General

requesting an investigation of your
authority to continue full agency

operations with only one board member.

Our latest request.

Requested information on what
legal analysis, if any, the

NCA or other administration
officials conducted to assess the

firings impact on the NCA Board.

Copies of all written communications
and documents between NCA officials, the

White House, and other administrative
administration officials regarding

the decision, and a list of
actions taken by the NCA Board on.

Or after April 16th, 2025, the IG
response included a troubling, troubling

information that suggests neither the
NCA or the White House understands what

actions the agency can lawfully take
in the wake of the firings according

to documents provided to us by the
ig, when there is only one NCA board

member serving on the board, individual
board members may carry out any

essential function on the NCA Board.

You may recall that delegation went
into play in the early two thousands.

I've had a podcast about this, but
I was the deputy executive director

at the time, and there was only
one board member, Dennis Dollar.

Dennis Daher asked the general
counsel, what things can I do?

And they said you probably shouldn't
vote on anything because there's

a question about what a quorum is.

They decided what he could
do was have briefings.

That's when the N-C-U-S-I-F quarterly
briefing was born and he did

another briefing, and then there,
I think there were two meetings,

and then he was joined by two.

Additional board members Joanne Johnson
and Debbie Matts who filled out the

full compliment and then they could
move forward with their full agenda.

But by the end of that year they said,
Hey, we should clarify some of this.

And they put into NCAA's delegations that
if there's only one board member, they

can take essential actions and carry out
any essential functions for the board.

So what is essential, in the eye of the
beholder, and that's what part of what

the Democrat's problems are with what's
going on at NCUA at this point in time.

However, the IG was unable to produce
any documentation that delineates

between essential and non-essential.

I.

Functions, and I, that's
consistent with what I said.

There was never any definition of
essential when I was at NCUA, and it

doesn't sound like they've added that.

So it's really what's in
the eye of the beholder now.

What is the definition of
essential absolutely necessary.

Extremely important, a thing
that is absolutely necessary.

You need a budget to conduct
business at NCO eight.

You could argue that is essential.

They liquidated a credit union.

The debt authority had already been placed
with the regional directors for years.

You could argue that in order to
reduce the cost of the insurance fund.

And unsafe and unsalted
actions at that credit union.

They needed to liquidate that credit
union and live by the old delegations.

Now, this is a new delegation or was
25 years ago, where they said that

essential actions can be taken by
the NCUA when there's only one board

member, but they're trying to get to
the bottom of what actions have taken.

Then they have a paragraph
of, the agency is responsible

for the safekeeping of the 2.3

trillion in assets in the credit union
system, most of which are the deposits of

hardworking Americans, saving for college
to buy a home or saving for retirement.

Credit Unions currently serve more than
142 million members, and the absence

of any meaningful description of what
the agency can do during the period

of time when it has one board member
raises serious concerns and questions.

Yeah, this is politics politics 1 0
1, but, you may recall, or you may

not be aware, but Elizabeth Warren
was the architect of the CFPB.

The CFPB has one person in charge of it.

She was comfortable with it there, but
she's not comfortable with it at NCA.

Now that doesn't go to the
fact that Congress established

the Federal Credit Union Act.

Congress said, you do
need to have a full board.

But little disingenuous 'cause
sh Warren was comfortable with

the CFPB being led by one.

She just doesn't want NSU a led by
one because it's an R right now,

and it flies in the face of the
lawsuits that Harper Osca have put

in place the actions that Trump has
taken here and at other agencies.

But in any event, they have a hat
tip to you know what's going on.

You only have one leader.

Moreover, there is a significant evidence
to suggest that the NCA Board cannot

fully function with only one board member.

By statute, the NCA Board
shall consist of three members.

Yep.

And a majority of the board
shall con constitute a quorum.

The board has brought authority to oversee
federal credit unions, including the

power to prescribe rules and regulations.

The board regulations make it clear
that the agreement of at least

two of the three board members is
required for any action by the board.

The regulation also provides, a
board cannot hold regular meetings

if a quorum is not available.

So their own regulation is probably,
to me, their Achilles heels.

In this, they say they need
two people to do anything.

That's a regulation.

And if you wanted to say a
regulation was essential, how can

you do it if there aren't two now?

They have, I think, internally
opined that a quorum is one.

If there is only one.

So you can meet the quorum.

I've done some research on that.

You can argue a quorum.

You need at least two.

If you have a, if you have a a
homeowner's association that's

supposed to have five board members
and you only have two board members.

What's a quorum of two?

It would be two if everybody resigned.

But one, you still need to, you still need
to go on, you still need to carry on at

NCUA at any organization with the board.

So I would argue, and they are
arguing that with one board

member, you need to be able to do
certain things and those things.

As previously established by delegations
approved by a full board, would

be that those things would have to
be essential things, but they go

back to have you defined essential.

What is essential, what have, what
actions have you taken, and again,

we'll get to that here shortly.

The IG provided documents
showing the delegations of

certain authorities to the chair.

For example, the chairman of the
board was given the authority to

act unilaterally during emergencies.

In an emergency situation, the NCA
board chair may temporarily revoke

certain delegations of any staff
person, exercise all HR authorities

retained by the board place.

Certain senior officials on administrative
leave and the chair in a state of

national emergency may also act exercise.

All authorities retained by the
board, by the way, state of national

emergency is what it sounds like.

It has to be that the federal government
whether it's Homeland Security or the

President, I'm trying to remember who
actually makes that determination.

If there isn't a state of national
emergency defined elsewhere, NSU

A cannot use that de delegation.

I.

What else?

There was something else here unilaterally
during emergencies and emergency, we

may temporary revoke by the way, that
regulation, that delegation about

revoking delegations is redundant.

Because when I was there, we added
some language to the delegations

that said the delegations flow
through the chain of commands.

When I was the executive director, if
I didn't like how a regional director

was doing on their delegations I could
revoke it and do that action myself.

It flows all the way back to the board.

Now, I never did that.

I never wanted to do that.

I never needed to do that.

'cause the rds were doing a fabulous job.

But the authority to do that
is there, but I digress.

Notably, however, the NCA is not
currently in a state of emergency and

outside of emergency situations, board
members' ability to act is more limited.

Agreed.

According to the ig, the board
has acted on 11 board action

memorandums on or after April 16th.

The IG found that former board
member Todd Harper, voted yes on

one of the 11 items prior to his.

Firing on April 16th.

Pretty sure that's the one that
authorized their buyouts at NCA, which

is a good thing because to me, at
first, I thought when I saw the list

and the buyout program was on there.

By the way, NCA folks, if
you're listening, I think your

buyouts are safe 'cause Todd.

Todd voted on him.

They don't say that's the one here
that he voted on, but I have it from

good intel that's the one he voted on.

How?

How otherwise, however, you appear to have
acted on bams unilaterally again, without

any consideration of whether these actions
are essential functions of the NCUA board.

So it's interesting they are arguing.

That the delegations allow
for essential functions.

But there are only three and beyond
essential functions you can't really act.

And I don't think you
can have it both ways.

I think it's smart that NSU A has this
essential functions that I helped put it

in place back in the early two thousands.

But, at what juncture who's
to define what essential is,

the act doesn't talk about it.

Regulations don't talk about it.

You clearly need to go on in the
scenarios that exist, but let's say.

An accident happened and all three board
members were together and they were gone.

They have delegations that allow the
executive director to act for the board.

I wouldn't have felt very comfortable
having been the executive director

having to do those things.

And that would've been thrust upon
me in my days, had that happen.

Thank god it didn't happen.

But it's not consistent with the
Federal Credit Union Act, and

even this essential thing is not
consistent with the Federal Act.

Do you need something in place
that allows you to do it?

Sure.

I agree with that, but.

They're getting into the weeds
on what is essential, and I think

it's a wise discussion to have.

So to help us better understand
the legit legitimacy of the board's

activities during this time, we request
the following no later than July 7th.

So I'm looking forward to when they
reveal this July 7th information.

And oh, by the way one of the
things that could happen from

this is because this is happening.

You could see Donald Trump move quicker
to replace those two board members.

Will he do it before a court
case is decided on the lawsuits?

Not sure.

But in the court cases, the government
argued that even if you determine I could

not have fired them, the solution to
put them back is not the right solution.

So Har so the judge could say.

Trump was right.

The judge could say, Harper Osco
were right, but even though they

were fired, they can't, they,
the next president can't do this.

We're not gonna put the people in.

And then theoretically, Harper, excuse
me, Trump could put his own people

in which would be another Republican.

At least, and possibly a d maybe they
just put an rn and then all of this would

resolve itself except for the actions
that may or may not have TA been taken

in compliance with the delegations.

Oh, and or in compliance with
the Federal Credit Union Act.

By the way, I mentioned I did a
podcast about a conservatorship.

Conservatorship requires a board action
that cannot be delegated to staff.

So Halman had to sign off
on that delegation, excuse

me, that conservatorship.

Was that essential?

The argument would be if we
didn't do it there would've been

losses to the insurance fund.

That's bad for everybody.

I could make an argument if the essential
delegation is true and indeed legit.

I would like, you could
argue that could be done.

You could also argue that there
is no quorum if which is what?

Which is what?

Is being argued here by Warren.

In addition, since they haven't defined
what essential is, you can do A, B,

C, X, Y, ZI don't believe they had.

I know we never had.

And they're implying here.

The IG said they hadn't.

And they're throwing some gasoline on
a fire saying, Hey, you haven't defined

what essential is, but you're taking all
these actions, what's essential, what

isn't essential, et cetera, et cetera.

So what they've asked for.

What constitutes an essential
function of the NCA Board?

Please provide the statutory
provision this authority is based on.

There is none.

And provide copies of all documents
that include any official definitions

or description of this term.

There is none or there was none
when I was there or which seems

consistent with what the IG has said.

As I just summarized, if no documents
exist, please provide examples of past

actions of the NCA Board that have been
deemed an essential function and why.

For each of the 11 bams, the ID g
identified as having been acted on.

Please explain whether any
qualify as an essential function.

Of course, they're all
gonna qualify, right?

'Cause if they haven't built this, they're
gonna build it retroactively to show that

the actions he took fit the definition.

Retrofit, I think is what we'll call
that as identified in question one.

You.

If you identify any of the bams as an
essential function, please explain why.

Please provide any contemporaneous
legal analysis justifying this

determination, including on what statutory
provision this analysis is based on.

Number three, what constitutes
an emergency situation under the

in Sue's delegation of authority?

What constitutes a state
of national emergency?

Please provide copies of all documents
offering official definitions

or descriptions of these terms,
including what statutory provision

this authority relies on it.

Don't document exists.

Please provide examples.

When this emergency authority was
invoked, I'm pretty sure I'm the

one who presented that change to
the NCA board at a board table.

And there would have been a bam
and no preamble 'cause it wasn't a

regulation, but, this is my recollection
that the emergency was linked to the

outside government definitions of it.

And ey, if you're listening, go back to
when that delegation was put in place.

My recollection is I presented it
and there might have been questions

relative to it hey maybe my statements
about what it means will be, make its

way to Elizabeth Warren as they're
weaving their way through this.

Is the NCA currently operating
in an emergency situation?

The answer is no.

Or a state of national emergency.

The answer is no, based on
what I just previously said.

If so, please provide all written
communication and documents, including

but not limited to meeting schedules,
records analysis, and the correspondence

between NCA officials and between NCA
officials and other administration

officials regarding the emergency
situation or state of national emergency.

Trump just bombed Iran and
that isn't, hasn't led to a

state of national emergency.

So clearly NCA is not in a
state of national emergency.

Okay.

I digress.

Are there additional delegations
authority, if any, at the NCA,

relevant to the chair's ability to act
individually in the absence of a quorum?

If so, please provide a detailed
description of those delegations

along with any legal analysis.

The IG was informed that.

No one at the NCA, including the board
chairman, chief of Staff knew about the

removals until they occurred, so there
was no communication between NCA officials

and the White House or the administration
officials in advance of the firings.

Please confirm this.

Additionally, what communications between
NCA officials and the White House.

Or other administrative
officials regarding the firings

occurred on or after April 16th.

Please provide copies of all written
communications and documents,

including, but not limited
to meeting schedules, records

analysis, and other correspondence.

I need a sip of water.

I.

Given the independent agencies like
NCA are now required by a presidential

executive order to submit draft
regulations for approval by an office

within the White House Office of
Management and Budget, A-K-A-O-M-B,

have you or your staff had any
communications with such White House

officials about whether NCOA is able to
issue regulations as a one member board?

They've argued that they can, a
leaked email from NCA executive,

Larry FAO said, remain calm.

We can do whatever we want.

So not sure if what they're asking
for here has happened, but that is

NNC a's current position apparently.

If so, please provide copies of all
written communications and documents

in an email to the NCA General
Counsel and Deputy General Counsel on

April 16th, the NCA Chief of Staff.

Indicated that she wanted to talk
briefly about any risks we might face

going forward related to the firings.

What risks did the chief of staff
general counsel, deputy General

Counsel, and any other officials
identify as facing the NCA?

In the wake of the firings, I argued
in my conservatorship podcast that

maybe Helpmann didn't have the
authority to conserve a credit union,

and there's a 10 day window for
someone to contest a conservatorship.

I believe they could have made
that argument and possibly

had the conservatorship.

Reversed, but that's a
high legal threshold.

You have to prove that it
was arbitrary and capricious.

Not arbitrary or capricious.

Arbitrary and capricious.

Two complicated legal words.

Those are the types of risks
that could be pointed to here.

So there's the ig.

Response that went back to
Warren and Waters on May 6th.

That was a footnote by the
Acting Inspector General.

And what really caught my eye was the fact
that they had a list that was a footnote

of all the actions Halman had taken.

And here's what they are.

There was a vote on.

April 18th to establish
the semi-annual agenda.

I have not seen what that agenda is,
but they took a vote by notation.

Vote with notation vote.

Typically, if you have three
board members, all three

board members can decide.

It doesn't need to go to a board meeting.

There's open board meetings that
have to be done in the open.

There's closed board meetings
that have some confidential

issues like personnel or appeal.

For example, a notation vote any,
if there's three board members,

any board member can bring.

Can trigger that saying, Hey, I don't
I may vote for this, but I wanna

have a discussion on the record.

And NCA has gotten
notoriously, I don't wanna say.

Lazy, 'cause that's not the right word.

They don't take things
to close board meetings.

They do it all by notation vote, because
it's easier for them, it's easier for

staff, and it's not on the record.

There's no dialogue that happens.

But I think they've driven a truck
through the delegations that say

what you can do by notation vote.

There should be some things that are
probably done by notation vote that

should be done at a meeting and there
should be some level of discussion.

But hey, if they're getting
along so well and they can

work it out behind the scenes.

Nudge, nudge, wink, wink.

Why not do it by notation vote Clearly
if I was there as a staff member, I would

prefer notation vote 'cause it's simpler.

All right, so what happened?

They had the semi-annual
agenda approved on April 18th.

Also on April 18th, they had the
board appeal request for oral heal

hearing appeal of a denial of a
credit union change and officials.

So somebody.

Who was in a troubled institution,
meaning a four or a five was denied the

ability to serve, and somebody appealed
that and Halman voted on that himself.

Was that essential?

It was essential probably because
the person had due process.

That would be my argument if I
was in COA and he had to provide

that due process notation, vote
on the schedule policy career.

Petition to OPN on April 21st.

That's a little wonky of a subject,
I'm gonna guess that relates to

something they had to provide to OPM
in order to do their buyouts note.

So this is where I could get
complicated if someone wanted to

say, you didn't have the authority to
do this, and there were pieces that

Helpmann approved after Harper left.

Theoretically, you could argue that
somebody could say you didn't have

the authority to do the buyouts.

I don't think that'll happen.

'cause who will wanna make that?

Who would wanna make that statement?

And it would be a heavy burden
to prove anyway, but that's

theoretically a possibility.

Notation vote.

The NCA Deferred Resignation
Program approval or request.

S SP's.

Postponed paid administrative leave.

So this is an instance where Harper
had approved the plan with Helpmann

and they've decided that they wanted
to weave in approval to request SSPs,

postpone paid administrative leave.

So they were requesting staff to.

Who were put on leave, they were
creating a carve out saying, Hey,

we'd like you to stay longer.

And they wanted to make that request
as part of of the plan notation

vote, SSP, performance standards.

So they changed something in NCAA's
performance appraisal system.

My guess is Helpmann wanted
to put something in that.

The White House said needed to be
in, or OPM seated said they needed

to be in and it needed to be fixed,
or it was just something that

Hoffman wanted, probably not that.

So this was probably deemed
essential because OPM or Trump

asked for it, a change in the
Alleg NCA delegation revisions.

It's possible I would
love to see that document.

The April 25th changed to NCA delegations,
but those are revisited on occasion.

For example, there's asset
thresholds on a loss.

If a loss to close a credit union is gonna
be over a certain threshold, two or $3

million don't have them in front of me.

The regional director
can do it themselves.

There's a loss threshold where it
has to be the regional director with

concurrence of the office of examination
of insurance, and then there's a lost

threshold where it has to come to the nsu.

A board.

There are similar thresholds
for buying a bank.

Which is something that they were very
close to changing at one point in time.

Hopefully that's a change they made.

But they tweaked the delegations was
that essential, I guess that really

would determine what changes were made.

But clearly they said it was essential.

'cause he took the action, they revised
the examination schedule policy.

So this they had to do this.

I.

Because they're getting rid of 25%
of their staff due to the buyouts.

They don't have the staff
to do the old policy.

By the way, they couldn't do the exams
on time when they were fully staffed.

They tweaked their policy at the beginning
of the year, and then the firings

happened, and then the buyouts happened.

So it went from bad to worse.

And they're in a triage state right now.

So this makes sense that
they had to do this.

But be, again, arguing that because Trump
said, do buyouts, we had to do buyouts.

We need to change our policies.

Therefore it's essential
that I vote on this.

That would be the argument
that I would make.

Makes sense.

Notation, vote.

Simplification of the share.

Insurance and succession planning rules.

Solicitation of comments.

So they requested comments
on those two rules.

Rules that were finalized under Harper.

They came out and said they're taking
taking comments on these regulations.

Now, this is where it gets to that
regulation that says the regulations, the

regulation on how to do regulations, which
says they have to have two board members.

You could argue that they, that
he doesn't have the authority.

Is it essential that they
change succession planning?

They could do succession
planning via a rule.

They, which they did.

They could do succession
planning via guidance.

They could argue that they wanna do that.

But is it essential that
they made these two change?

I think that's a weak argument,
but hey that's just me.

Notation vote number nine.

Action.

Number nine.

Personnel acting appointments
and reassignments.

They have delegations of authority on
who can select who for what positions.

So for example, the executive
director, the regional directors, the

inspector general, those positions
can only be approved by the board.

The ss, which is an SSP three position.

The SSP ones and twos,
theoretically lower level.

Executive positions, those can be approved
by the exec, the executive director.

They weren't always done that way.

The boards typically would
actually vote on those.

And so there were some things that
needed to be done to put people in

place, like the acting inspector general,
which is the next item appointment

of an acting inspector general.

You need an inspector general.

You can only act in the short term.

120 days without be putting into a PI
position or rotating it in other people.

And again, they're in tri triage mode.

They need to follow the
rules to the best they can.

And I'm guessing there are some
temporary promotions tied to

this, and I'm trying to remember.

OPM has established some things the
agencies can do in these scenarios,

but hopefully these people who are
stepping up are getting paid for it.

They approved an open board meeting
transcript for the January 16th, 2020.

So he reviewed the
transcript and approved it.

Is that essential?

I don't know.

Maybe the reg says they have to do it.

That would be the argument.

So they've taken 11 actions some of
'em interesting, some of them benign.

And then the 12th action was
that conservatorship, which

again I have a podcast out there
called, it's a, was a bold move.

Why was it bold?

Because you could argue.

As is waters and elizabeth Warren, I
don't know why I can't remember her name.

I can see her in my head.

Elizabeth Warren and Maxine Waters.

As they're arguing, you are doing things
you don't have the authority to do.

You are doing things under a definition
of essential, which hasn't been defined.

So we'll see where this goes.

We'll see if the lawsuits of
Harper and Ska are decided

before this letter goes out.

But interesting times in Credit
Union Land, and again, we have

Warren and Waters versus Trump.

We have Warren and Waters
supporting Harper and Ska.

And by the way, this letter reads
too good for it, having been

written by somebody on the hill too.

Good for it to have been written by.

Warren or Waters or their staff, in
my opinion, this was written by Harper

Otsuka and their law firm, and they are
that connected, both Harper and Ska.

Otsuka came from Sherrod Brown
staff on the banking committee.

Harper was with Senator Sarbanes.

I.

Had the juice to get the ability to
serve as a board member for 11 years

in two terms and get that definition
of what a full term is swapped.

So those two folks have the juice.

They have a law firm.

I think those three people worked
together to get this letter

into war and water's hands.

Did they tweak it and did they
sign it, making it their letter?

Of course they did, but I think it
came from somebody very close to

the the system and probably Harper
was a huge architect of this letter.

All right, I'm losing my voice
here on a Sunday morning.

I hope you enjoyed this POS podcast.

As more information becomes available
on this, I will update you here and

on LinkedIn and via my mailing list.

As always, I appreciate you listening.

I hope you'll listen or watch again soon.

This is Mark Kel signing
off with flying colors.