by Will Rogers, Jr.
It takes a special kind of Washington brilliance for a regulator to decide the greatest threat to the republic is its own discretion and then propose a rule to rescue us from itself. But here we are.
The NCUA has unveiled a proposal that essentially says: “We hereby forbid ourselves from misbehaving. We don’t trust ourselves either.”
In a normal world, regulators create guardrails for the people they regulate. Only in our nation’s capital does an agency build guardrails to keep itself from driving off the road.
The Rule’s Premise: Reputation Risk Isn’t Real
This proposal seems to assume that reputation risk is some imaginary creature—like Bigfoot, or a cheerful airline fee.
One wonders whether the drafters have heard of a quaint little story called Wells Fargo, where an institution spent years rebuilding trust after opening millions of fake accounts. But perhaps NCUA thinks that was all just a marketing misunderstanding.
If the agency truly believes reputation risk is fictional, one hopes they never Google “NCUA failures” or, heaven forbid, read their own Inspector General reports.
Who Exactly Is Being Protected Here?
The proposed rule claims to stop NCUA from pressuring a credit union to decline accounts for certain businesses: liquor stores, cannabis operations, burlesque venues, adult-film producers, and so forth.
One might ask: Has this ever happened? Even once? Anywhere?
No.
This is Washington’s favorite sport: solving imaginary problems so it can avoid the real ones.
Meanwhile, the real harm that does exist: merger-driven CEO enrichment, member disenfranchisement, sham elections, and sending member savings to buy bank shareholders’ at premiums, goes unaddressed because someone must ensure the men’s club dancers of America are free to open checking accounts. The republic is safe.
The Greatest Burden: Fixing What Isn’t Broken
Fixing real problems is difficult. Fixing imaginary ones is far easier, and far more wasteful.
Rules like this drain time, staff attention, and credibility. Worst of all, they distract the agency from the issues actually hurting members:
- selling strong, local credit unions to distant ones,
- conducting board elections with all the transparency of a papal conclave,
- and using member capital to fund bank-acquisition premiums.
But at least NCUA has now protected the nation from the nonexistent threat of ideological debanking.
Reputation Risk: It Exists (Even if NCUA Pretends Otherwise)
Reputation isn’t a theoretical construct. It is the currency of leadership.
It evaporates when leaders substitute ideology for competence.
It collapses when institutions forget who they serve.
It disappears when regulators look the other way, or worse, when they look inward and pass rules to restrain what they themselves might do.
If NCUA doubts that reputation risk is real, a previous post about NCUA’s morally incompetent General Counsel and Chief Ethics Officer has already written the case study for them: A Culture of Impunity, a chapter the agency should revisit with a box of tissues handy.
The Real Absurdity
This proposal doesn’t make the agency strong. It makes it look frightened. afraid of its own staff, its own judgment, and its own shadow. It solves a problem that does not exist, while ignoring several that are eating the system alive.
Proposing this in order to curry favor with ideological overseers does not enhance NCUA’s standing. It diminishes it. It invites laughter in all the wrong places.
A Modest Suggestion
If NCUA wants to improve its reputation, there is a simpler way than pretending reputation risk doesn’t exist: Let this rule die quietly. Slip it into a drawer. Close the drawer. Lose the key.
As Will Rogers, senior advised: “Never miss a good chance to shut up.”