Harper said the magnitude of the appraisal increase was too large, noting that banking agencies increased their threshold from $250,000 to $500,000.

"We're not just running before we walk, we're leapfrogging over the other banking regulators," he said.

Hood disagreed, saying, "If this regulation raised safety and soundness issues, I would not move forward and it would not be on our agenda," Hood said.

McWatters agreed, saying that the rule was properly tailored.

"I don't see a safety and soundness issue at all," he said.

In presenting the rule, agency officials said that the 2008 financial crisis was fueled by a lack of prudent underwriting, not appraisals.

And they said that only 4% of all credit union assets are invested in commercial real estate.

The rule, as adopted, also would exempt from appraisal requirements certain loans made in rural areas.

NCUA Senior Credit Specialist Lou Pham said that the agency will be taking a closer look at credit unions that have high concentration of commercial real estate loans as a result of a new examination process that will be put in place later this year.

That process is being developed, in part, as a result of an agency Inspector General report that criticized the agency for not taking action against credit unions with high concentrations of taxi medallion loans.

Credit union trade groups endorsed the threshold increase.

"NAFCU supports the NCUA's decision regarding commercial real estate appraisals, as it better aligns credit unions' standards with those contemplated by the other banking regulators and provides meaningful relief for rural areas," said Ann Kossachev, the group's director of regulatory affairs.

"CUNA advocated strongly to raise the threshold for required appraisals for commercials loans to $1 million from $250,000, which will provide relief for credit unions," CUNA Chief Advocacy Officer Ryan Donovan said. "Making it easier for credit unions to determine whether an appraisal is required will also benefit credit unions and their members."

However, a major banking trade group criticized the rule as further evidence that the NCUA is conducting lax oversight of credit unions.

"As today's debate from the divided NCUA Board showed, the NCUA continues to push the envelope for the credit union industry without any reasonable justification," Ken Clayton, head of ABA's office of legislative affairs said. "Eliminating the parity between NCUA and other financial regulators is bad public policy that would lead to a buildup of risk in less-regulated credit unions that already have weaker capital standards than banks."

He added, "his rule is just one more reason why lawmakers need to take a hard look at NCUA for failing to exercise its congressionally-mandated oversight of the credit union industry."

The board on Thursday also adopted a final rule governing the fidelity bonds that credit unions must post.

Harper said he was concerned that the agency had submitted the proposal to the Office of Management and Budget before it was presented to the board.

Earlier this year, OMB issued a memorandum that began requiring independent federal agencies to submit rules and guidance to OMB before they are adopted.

OMB justified the memo, saying that it would decide whether a rule is a major rule that must be submitted to Congress before it is adopted.

Harper said the memo could affect the independence of the agency.

Hood replied that the requirement did not affect the agency's rulemaking ability.

The board also adopted changes to a policy that requires credit unions that want to employ people convicted of  a "criminal offense involving dishonesty or breach of trust" or have been enrolled in a pretrial program for such crimes to receive approval from the board before the person is hired.

The policy change would allow the hiring of people convicted of crimes involving "insufficient funds checks of aggregate moderate value, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults" to be hired without board approval.

The board also was told that the agency's budget is running a $4.2 million surplus for employee pay and benefits this year and approved the re-programming of those funds for other purposes.