“I solicited the independent legal opinion in order to perform my own due diligence. I ultimately chose the Global Banking and Payment Systems practice of Paul Hastings, based in Washington, D.C. Paul Hastings' partners have years of experience on legal issues related to [prompt corrective action], from the perspectives of financial institutions as well as from the perspective of a federal agency,” Matz said at the NCUA's monthly board meeting Jan. 15 when the revised risk-based capital proposal was approved.

NCUA Board Member Mark McWatters voted against the proposal, arguing that the Hastings legal opinion was not a strong enough justification for the NCUA's legal authority.

“As a practicing attorney, I have served on the legal opinions committee of large cross-border law firms and note that a 'could' opinion represents a relatively modest standard of assurance. In the obscure, arcane and highly technical and nuanced world of legal opinions, key words such as 'could,' 'would,' 'should,' and 'more likely than not' truly matter,” McWatters said.

“The recipient of a legal opinion prefers to know that a court 'will' or 'should' or, at a minimum, 'more likely than not will' uphold the legal actions of the recipient. An opinion letter merely noting that a court 'could' uphold the actions of the recipient, although not entirely unhelpful, offers limited comfort to the recipient,” he explained.

McWatters was referring to a section of the opinion that said, “under current principles of applicable law and existing case law, a court of appropriate jurisdiction, in a litigated matter or proceeding, could conclude that NCUA's statutory authority permits the NCUA to establish the proposed two-tier RBNW requirement set forth in the Proposed Rule.”