Both David Chatfield, a Democrat who was nominated for the NCUA board by former President Ronald Reagan, and current outgoing Republican Board Member Michael Fryzel, told CU Times the full board should have voted on the vice chairmanship.

NCUA Public Affairs Specialist John Fairbanks said Matz had the authority to name a vice chairman without a board vote under 12 U.S.C. §1752a(e).

"The designation of the NCUA vice chairman falls squarely within this statutory mandate as it simply identifies who will have the responsibility and authority to act for the chairman in the event of her absence or incapacitation," Fairbanks said, relaying information from the Office of General Counsel. "The authority to determine who shall assume such responsibilities is a matter expressly reserved for the chairman in the Federal Credit Union Act."

However, according to section 790.2 of the code of federal regulations, "the chairman shall be the spokesman for the board and shall represent the board and the NCUA in its official relations with other branches of the government. A second member is designated by the board to be vice chairman."

In response to this regulation, Fairbanks said it is well established in the law that statutory governs regulatory.

"The designation of a vice chairman is within the chairman's authority to determine each board member's responsibility per the statute, regardless of the specificity of the regulatory language," he said.

Historically, the vice chairman has been designated by a board vote. Rodney Hood was last voted vice chairman of the NCUA Board on Nov. 30, 2005. JoAnn Johnson was voted vice chairman on Jan. 15, 2003, when the board was being led by Chairman Dennis Dollar.

Matz said on Aug. 4 she consulted with the agency's general counsel before appointing Metsger to the vice chairman's spot.

"I was told I had the authority to make the appointment. I consulted with our general counsel," Matz said in an interview.

Matz also said the time was right to name Metsger vice chairman, because Mark McWatters will join the board soon. Fryzel will not vote in the September board meeting. The White House has not confirmed reports that McWatters resigned from his job as dean for graduate programs at Southern Methodist University's School of Law in Dallas and will be sworn into office this month.

"When I came in, Board Member Fryzel had been the chairman, and I just did not feel it was appropriate for him to be the third member and have a vice chair. It would be somewhat disrespectful so I thought it would be better to wait until he left," Matz said.

"I did not want it to be demeaning to him to have been chairman and have someone else as the vice chair. It really was just out of respect for Board Member Fryzel," she added.

In response to Matz's comments, Fryzel told CU Times on Aug. 6 the matter should be brought before the full board at the next meeting.

"I'm not going to question her timing on doing something that was a decision made by her as to when she wanted to do it. I think what's come into question is the legality of how it was done. I think it's very specific in our regulations that the second member to be vice chairman is a designation by the board," said Fryzel.

"Now, certainly, the chairman puts forth the name of the individual she would like to be vice chairman and I have no problem with the name she has put forward, but that should have been brought to a board meeting for a board vote and that was not done. It's very clear that's how a vice chairman is selected," he added.

Fryzel said the NCUA Office of General Counsel should have followed the regulation since the Federal Credit Union Act does not specifically reference the vice chairman position.

"The act gives certain functions to the chairman and talks about assignments and responsibilities. It doesn't mention vice chairman. When the act is silent, it cannot trump a regulation that is specific to the vice chairman issue," Fryzel said.

"Once the regulations are put into place, they have the impact of law. You have to abide by the regulations. If the NCUA is going to ask credit unions to abide by the regulations we put forward, we must abide by the regulations we have in place. We cannot overlook them," he added.

Chatfield told CU Times a board vote is preferable since the appointment might appear to be a personal favor.

"I've not met Mr. Metsger, but from what I've read, he seems well-qualified to serve on the NCUA Board; a fine appointment by President Obama. He would also seem a good choice to be vice chair of the NCUA Board, but I think it would have been better for the designation to be by board action rather than appointment by the chair," Chatfield said.

"While either way may be valid, having it sanctioned by board action seems more fitting and appropriate, while appointment by the chair may have the appearance of a personal favor or obligation," he added.

Matz said the vice chairman title is mostly symbolic.

"If I were somehow incapacitated, he would assume my duties and responsibilities," she said. "He'll be a representative on NeighborWorks and other duties as assigned. Of course, I'll talk to him and see if there's anything he would like to dig his teeth into."

One industry source said the move could be an effort to solidify Metsger's support for the risk-based capital proposal, in particular, disapproval of a second comment period for the rule.

Mary Dunn, CUNA SVP/deputy general counsel, said Metsger's new position would likely not have an impact on the board's consideration of the trades' regulatory concerns.

"Typically the agency has in the past had vice chairs and there's a good working relationship between Rick Metsger and Debbie Matz. I don't think that it's going to probably have too much of a difference in the workings of the trades," Dunn said. "It's really, as much as anything, an internal and administrative issue and I don't think it's going to change our dealings with either the chairman or Rick Metsger."

NAFCU President/CEO Dan Berger expressed a similar viewpoint: "Vice Chairman Metsger and his staff have been terrific meeting with NAFCU as well as our credit union members on regular basis to discuss the issue of regulatory burden. As with all issues we raise with board members, we sometimes get the changes we need and other times we have to agree to disagree and keep pressing the issue."

Obama nominated Metsger for the NCUA Board last year. His term will expire on Aug. 2, 2017. His new position as vice chairman is effective immediately.

"I am honored by this appointment and grateful to Chairman Matz for placing her confidence in me," Metsger said. "I look forward to continuing our work safeguarding the more than $1 trillion held by America's credit unions in trust for their members."

Prior to joining the NCUA Board, Metsger served in the Oregon State Senate from 1999 to 2011, which included chairing the Senate Business Committee. Metsger was named the Senate President Pro Tempore in 2009. He also served on the board of the Portland Teachers Credit Union.

"Rick has built on his experience and knowledge as a legislative leader and a credit union board member to become a strong, objective, and thoughtful regulator," Matz said.