Spurred by reports of top officials’ spending, CU regulator nominees asked to align expense policies with other regulators

Recent reports by a federal watchdog, and coverage in a national newspaper, of questions over spending by top officials at the federal credit union regulator were part of Thursday’s confirmation hearing by a Senate committee, with two nominees vowing to look into the issues with an aim of aligning expense policies with other federal financial institution regulators.

While much of the attention by the Senate Banking Committee members during the joint hearing on nominees for various positions at federal financial regulatory agencies was focused on Mark Calabria (nominee for director of the Federal Housing Finance Administration [FHFA]), committee Chairman Mike Crapo (R-Idaho) asked nominees for the National Credit Union Administration (NCUA) Board, Rodney E. Hood and Todd M. Harper, their views related to recent reports about expenses submitted by agency board Chairman J. Mark McWatters and his chief of staff, Sarah Vega.

Both last month and this week, the NCUA Office of Inspector General (OIG) posted reports on its findings over allegations of “extravagant” travel expenditures by McWatters and Vega.

In January, the agency’s OIG published on its website a 25-page report detailing an investigation into a complaint received in August 2017 about the expenditures of McWatters and Vega. Dated May 14, 2018, the investigation report recapped interviews with agency staff and reviews of reimbursements and receipts related to travel and dining expenditures in 2016 and 2017. The investigation was closed in 2018 with no action taken (and, the OIG report notes, the U.S. Attorney’s Office for the Eastern District of Virginia declined prosecution of the case on March 29, 2018). Regulatory Report was among the first to report on the OIG review.

However, The Washington Post Jan. 19 published a story shining more light on the report, under a headline “A $450 dinner, $45 whisky: Political appointee, aide ring up the expenses.”

Last week, the agency OIG filed another report providing additional details about executive spending at the agency, this one highlighting expenses by Vega. (Regulatory Report also was among the first to report on that review.)

Crapo asked both NCUA Board nominees Hood and Harper how they would address expense issues at the agency (raised by the Post article) if they were confirmed. “It is my understanding that the NCUA reimbursement policy may not be aligned with that of other federal financial regulators,” Crapo said. “Can you both commit to reviewing NCUA’s expense reimbursement policy and making updates to better align it with the policy of other federal financial regulators, as appropriate?”

Hood and Harper both responded – swiftly – that, yes, they would. “I recognize that those of us in public service must continually garner the trust of the American people,” Hood responded.

Harper echoed those comments. “It’s important for me that the rules be clear so that people understand them, that they be consistent across regulators, and finally that they be communicated so that they can follow them. Those will be my guiding principles as I work on that issue as well, if confirmed,” Harper added.

RR: CU regulator nominees vow to protect safety and soundness, focus on transparency (Feb. 14, 2019)