With two nominations to the Securities and Exchange Commission garnering the most attention, National Credit Union Administration board nominee Kyle Hauptman faced little questioning during his confirmation hearing Tuesday before the Senate Banking Committee.
The only pointed criticism came from committee ranking Democrat Sherrod Brown of Ohio, who questioned Hauptman’s qualifications and experience.
Brown said that Hauptman, formerly a trader at Lehman Brothers when it collapsed, should understand what a financial crisis is, but added that the nominee has “spent his career railing against the Dodd-Frank Act.”
Brown noted that in Hauptman’s testimony, Hauptman said that when he meets someone who actually loves their financial institution, there’s a good chance you’re speaking to a credit union member. “But being glad that credit unions serve their customers isn’t a reason that he is qualified to be one of the three top credit union regulators; it means he should be a credit union customer,” Brown said, adding that Hauptman has no credit union experience.
During the hearing, Brown also noted that Tuesday was the 10th anniversary of enactment of the Dodd-Frank Act, adding that the NCUA under the Trump Administration has been “chipping away at the very protections we put in place after the last financial crisis.”
Hauptman is Sen. Tom Cotton’s economic policy advisor and staff director of the Senate’s Economic Policy Subcommittee. Cotton strongly endorsed his nomination and read a letter from the Arkansas Credit Union Association supporting the nomination.
In his testimony, Hauptman said that his experience working as a trader for Lehman Brothers when it collapsed provided him with unique experience for the NCUA. “That experience showed me first-hand the risks associated with liquidity, interest-rates and balance-sheet management,” he said.
He outlined three priorities for his work on the NCUA board.
First, he said, the NCUA must help the nation recover from the coronavirus crisis. “Credit unions were chartered to serve those of modest means, and I plan to work with them, the board and Congress on solutions for those facing financial stress,” he said.
Second, Hauptman said, the pandemic has offered policymakers a unique opportunity to use technology to work remotely. He said he believes that technology should be used to reach underserved areas and people.
Finally, he said, he wants to use incentives to encourage good management at credit unions. He said that the practice of requiring fewer examinations at credit unions that score well on safety and soundness tests could serve as the model for other NCUA policies. “This policy lets regulators focus on more problematic credit unions, while the well-run credit unions strive to keep earning that benefit,” he said. “This is policy where safety and soundness are well-aligned with serving members.”
As the hearing ended, Banking Chairman Mike Crapo (R-Id.) indicated that he intends to move quickly on the nominations. He asked that Hauptman and the other nominees answer all written questions submitted to them by Monday.
Prior to working for Cotton, Hauptman served on President Trump’s 2016 presidential transition team and was Sen. Mitt Romney’s (R-Utah) financial services policy advisor when Romney was the GOP presidential nominee in 2012.
From 2015 to 2016, Hauptman served on the SEC’s Advisory Committee for Small and Emerging Companies.
Hauptman was a fixed-income trader in Tokyo, New York City, and Sydney, Australia. He earned his MBA from Columbia University and his B.A. from UCLA.
Prior to the hearing, CUNA President/CEO Jim Nussle sent the Banking Committee a letter outlining issues the trade group would like to see Hauptman address.
For instance, Nussle said the NCUA board should return the Share Insurance Fund’s equity ratio to 1.30% over a reasonable period. It now stands at 1.39%. He also said the trade group favors extending the exam cycle for credit unions with under $3 billion in assets.
Nussle also reiterated CUNA’s opposition to the NCUA’s Risk-Based Capital Rule, saying that the effective date of the rule should be set at January 1, 2023 at the earliest. “This delay will also allow the NCUA more time to study whether additional changes should be made from these requirements or to forego the initiative altogether, given the new COVID-19 economic environment,” he said.
CUNA also would like the NCUA to amend its rule governing the original Payday Loan Alternative model to eliminate the requirement that a borrower be a member of the credit union for at least a month before obtaining a loan, Nussle said.