"If any one of those outliers were to fail, all credit unions would have to pay for their losses," Matz said. "The average complex credit union has assets of $679 million. Thus, if this rule prevents the failure of only one credit union with more than $600 million in assets, it will be well worth the costs of $2 million in paperwork costs to credit unions and $2 million in implementation costs to [the] NCUA."

Touching on the second theme – the lack of impact on most credit unions – Matz also made it clear the rule would only cover complex credit unions, which the agency defined as those with more than $100 million in assets. That means 76% of all credit unions – 4,784 – would feel no impact from the rule, while only 24%, or 1,489, would have to evaluate their risks.

During a post-meeting press briefing, Fazio said the agency had not told the 16 credit unions they were on the list, and that some of them lacked sufficient capital because they had a lot of goodwill or regulatory goodwill on their books from having participated in an assisted merger with a troubled or closing credit union. Fazio explained goodwill and regulatory goodwill are considered assets, but not tangible assets that would play a role in a liquidation if the credit union were to fail.

NCUA Board Member Rick Metsger also hit on the themes during the meeting, using some of his comments to emphasize ways that, he argued, the industry needed the rule.

"Won't this rule impose a terrible burden on credit unions?" Metsger asked, quoting a question he said the agency received. "No. The rule targets outliers, the relatively small number of institutions that are gambling with other people's money, and it discourages other credit unions from becoming outliers by requiring them to hold capital commensurate with their risks."

Although he didn't state its name, Metsger alluded to the recently conserved Montauk Credit Union when describing a situation in which, he maintained, the failure of a credit union with unsafe practices could have been prevented.

"Just last month, a state chartered credit union was conserved by its state supervisor for what the state supervisor called unsafe and unsound practices," Metsger said. "You may have read about it. That credit union put all of its eggs in one basket and would have been subject to the concentration requirements of this rule."

Metsger continued, "Yet when the first version of this rule was released, the CEO treasurer of that credit union wrote in the official record of [the] NCUA that the credit union was safe and sound. It had, quote, never suffered a loss, never written off a single penny of principle and should be exempted from the RBC rule, and highlighted the credit union's solid financial strength and the expertise [through] which their lending takes place. That was 16 months ago. Now [the] NCUA is the conservator of that credit union."

The New York State Department of Financial Services took possession of the $178 million Montauk Credit Union in New York City on Sept. 18 and appointed the NCUA as conservator. Montauk was one of four New York City area credit unions heavily involved in New York City taxi medallion lending.

Metsger also argued he believed the agency had spent enough time studying the different versions of the rule.

"With apologies to Winston Churchill, never have so many commented on a rule that will impact so few," Metsger said to widespread laughter.

In his prepared meeting remarks, NCUA Board Member Mark McWatters delivered a detailed critique of the agency's assertion that the Federal Credit Union Act gave it authority to issue a risk-based capital rule, stating that it affects both adequately and well capitalized credit unions.

Additionally, he suggested the agency's decision to classify credit unions with more than $100 million in assets as complex violated the law.

"In fact, the final rule uses asset size as a proxy for the portfolios of assets and liabilities of credit unions," McWatters said. "Although such an approach is not unhelpful from an administrative and rule implementation perspective, the risk-based net worth regulation must follow the express language of the Federal Credit Union Act. As such, the NCUA board must designate credit unions as complex only based on a definition of that term that encompasses credit unions' portfolios of assets and liabilities as specifically required by the Federal Credit Union Act."

In the press briefing, Fazio maintained the agency's research had determined credit unions with $100 million or more in assets almost always offer at least one product or service the agency sees as complex, such as a business lending program.

Although it was clear the three board members felt strongly about their positions on the rule, the discussion remained civil, with board members responding respectfully to each other's statements and even joking a little about the meeting's length.

Trade association leaders said they were disappointed with the final rule and emphasized the work they had done to improve the measure.

Dave Adams, president/CEO of the Michigan Credit Union League, praised the NCUA for listening to the industry when revising the first risk-based capital rule, which Adams called terrible.

Adams particularly praised the final rule's longer implementation time. But he maintained it still had glaring problems, including the degree to which it might inhibit appropriate lending.

"It's always hard to judge the unintended consequences of any federal regulation," Adams said. "But to the extent that the regulation makes it more complicated and difficult for credit unions to make mortgage loans and business loans, that's not a good thing."

He noted in particular the weight the NCUA assigned to CUSO investments, pointing out that CUSOs are one of the best ways for credit unions to cut their costs and streamline their operations through cooperation. CUSO investments should be encouraged, not discouraged, he contended.

CUNA President/CEO Jim Nussle criticized the rule, but argued the association had influenced the agency's final version.

"Make no mistake – CUNA firmly believes the NCUA's risk-based capital rule is a solution in search of a problem," Nussle said. "Since the initial proposal 20 months ago, CUNA and the leagues worked together to execute one of the most coordinated and successful advocacy campaigns in the past 15 years to ensure we significantly impacted the final rule to get the best possible results for credit unions."

He also challenged the rule's focus on capital adequacy.

"We're disappointed [the] NCUA retained the capital adequacy requirement, and will be pushing for examiner guidance and training to place some boundaries around this wildcard capital requirement," he said.

NAFCU President/CEO Dan Berger took a similar stance.

"NAFCU works continuously to secure good policy for credit unions, and we and our members are unwavering in our view that a legislative solution is required to create a true risk-based capital system for credit unions," Berger said. "Given [the] NCUA's insistence on moving forward with this rule, NAFCU has worked steadfastly to make a bad rule better. We acknowledge [the] NCUA's heeding credit unions' voices and incorporating some much-needed improvements. Specifically, the final rule recalibrates many risk weights to better align with banks' requirements, removes interest-rate risk from the calculation of the risk-based capital ratio and extends the implementation date."