Ironically, the governmental efficiency reforms that this Administration pursues may have negative externalities in the short-to-medium term in the form of regulatory gridlock. The Administration has offered NCUA staff generous buyouts in return for resignations, insisted on them returning to the office and demonstrated a willingness to aggressively terminate federal staff where it meets resistance. It appears that this Administration intends to shrink the federal workforce aggressively.

We suspect it will augment a smaller workforce with progressive automation techniques looking outward. In the meantime, the NCUA’s human resources may be strained considerably. In that case, examinations will remain the priority, while regulatory approvals for strategic decisions of credit unions (i.e. charter amendments, M&A transactions and capital raising) may suffer delays.

Rulemaking is another arena where the NCUA may struggle with responsiveness to the industry. During the first Trump term, the NCUA under Rodney Hood was active in rulemaking, much of which was designed to implement deregulatory aspects of the Trump 1.0 agenda. The NCUA relieved regulatory restrictions on nonmember deposits and the use of derivatives for hedging, expanded access to the low-income designation and its related regulatory relief and provided clarity on subordinated debt rules that helped spring activity in the market. However, in Trump 2.0, the Administration appears intent on centralizing rule making at the White House and offices closely connected to it.

That may limit this NCUA board’s ability to implement welcome policies or respond to industry challenges with rule amendments in a timely manner. If the NCUA Board must coordinate that closely with the White House on such matters, we question whether our industry can get the attention it will need to implement helpful rule changes going forward.

The Trump Administration seems intent on negotiating sweeping tax legislation to accomplish objectives like extending many tax provisions of the Tax Cuts and Jobs Act passed in Trump’s first term that are scheduled to expire this year. The Administration has also expressed interest in eliminating taxes on tips, overtime pay and social security income. This has sparked discussion of certain tax policies that might be implemented to help offset the cost of these tax relief priorities. For instance, the Trump Administration has floated the idea of finally eliminating the “carried interest” loophole that relieves much of Wall Street’s investment professionals from significant tax obligations.

It has been reported that the credit union tax exemption has also been noted in GOP legislative strategy documents as a potential source of offsetting revenue. Of course, the initiation of any broad tax negotiations presents an opportunity for the community bank lobby to forcefully challenge the tax-exempt status of credit unions in a context that could matter.

It is incredible to list this one, but it is a possibility to keep an eye on. The Trump Administration has insinuated in various statements by its officials that the government has too many agencies and too much text in the regulatory code. Reports from Washington D.C. indicate that discussion is ongoing within the Administration and related congressional committees about consolidating the various financial regulatory agencies into a single agency or rolling them into the Treasury Department. Presumably, this type of action would require comprehensive legislation to restructure the entire financial regulatory landscape.

Not exactly low-hanging fruit for this Administration, but the fact of it even being discussed is noteworthy. Falling under a regulatory purview that is not dedicated to credit unions, but rather dominated by generally larger segments of the financial sector may likely be a significant negative for credit unions.

Essentially, this Administration seems intent to break things of the old order and resolve them with new solutions. The timeliness of that process, its manner and specifics may have significant direct consequences and externalities for credit unions. The industry must be ready to intervene energetically in public deliberations and within its own organizations to address them as needed.