Sen. Richard Shelby (R-Ala.), chairman of the Senate Banking Committee, asked Larry Fazio, NCUA director of examination and insurance, why the NCUA is not permitting stakeholders to comment on the agency's budget during a public hearing.
Shelby also asked the NCUA why it paid an outside law firm for a legal opinion of its risk-based capital proposal instead of relying on its own general counsel. The senator's questions were in response to Fazio's testimony at a recent regulatory relief hearing in the Senate Banking Committee.
In the letter to Fazio, Shelby referenced NCUA Board Member J. Mark McWatters' vote against the NCUA's 2015 operating budget and his support for budget hearings.
“Board Member J. Mark McWatters dissented from the adoption of NCUA's 2015 budget and stated that the NCUA Board should permit public input on NCUA's budget. Since NCUA's budget is funded by mandatory contributions from the credit union community, why not permit members of the credit union community to comment on NCUA's budget at a public hearing?” Shelby asked Fazio in a follow-up letter to the Senate Banking Committee hearing on Feb. 10.
McWatters has called for the NCUA to hold budget hearings and allow stakeholders to view the NCUA's operating budget before the full board vote.
Shelby also referenced McWatters' vote against the agency's revised risk-based capital rule proposal. McWatters said the agency does not have the legal authority to implement a two-tier risk-based net worth standard.
Shelby asked Fazio why the NCUA chose to pay an outside law firm for a legal opinion rather than seek legal advice from its own general counsel.
McWatters has called the $150,000 Paul Hastings LLP legal opinion a waste.
“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.
NCUA Board Chairman Debbie Matz said she solicited 11 law firms around the nation to review the legality of establishing a two-tier risk-based net worth standard for the credit union industry.“Because this issue is so fundamental to the risk-based capital framework, I concluded that the agency should not move forward with a rule until we received an independent legal opinion from an outside counsel analyzing our authority,” Matz said at the NCUA's monthly board meeting Jan. 15 when the revised risk-based capital proposal was approved. “I solicited the independent legal opinion in order to perform my own due diligence.”
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