ALEXANDRIA, Va. — The NCUA moved forward Thursday during itsmonthly board meeting with a final rule that would allow thefederal regulator to declare a state-regulated, federally insuredcredit union to be in “troubled condition.'

Previously, that authority was only granted to state regulators.However, staff attorney Steve Widerman said while presenting thefinal rule to the board that the NCUA discovered a trend indiscrepancies between state and federal CAMEL ratings, and feltthat to protect the share insurance fund, it needed the newpower.

When a credit union's CAMEL code slides from a 3 to a 4, thattriggers the troubled condition designation, which allowsregulators greater supervisory powers, including the ability toapprove changes in volunteers or executive managers.

The proposed rule, when introduced in July, generated criticism from trade organizations concerned it meant the dualchartering system would take a hit. In particular, NASCUS, whichrepresents state regulators, was most concerned about what the movemeant for state regulatory authority.

NASCUS President/CEO Mary Martha Fortney said Thursday she stilldisagrees the rule was necessary, but said she was pleased to seethe NCUA added a provision to the final rule that requires thefederal regulator to first make an onsite contact with theconcerning credit union before officially overriding a stateregulator's authority and declaring it troubled.

NCUA examiners often conduct remote reviews of state examiner'sreports, and when they do disagree with state examiner's CAMELcoding, it's often without first visiting the credit union inperson.

Fortney said NASCUS suggested an onsite visit in its commentletter, and she's pleased the NCUA listened. She stressed that theNCUA's onsite review would be conducted in consultation with stateregulators.

Fortney said she was also pleased that Widerman and NCUA BoardChairman Debbie Matz stressed that the federal regulator did notintend for the rule to challenge state regulator authority.

Widerman said the rule was not “an authority contest” andstressed that the NCUA's new ability to override state regulatorCAMEL codes only applies to the troubled condition status.

Matz said during the meeting she was troubled by the perception the rule would diminish the dualchartering system, and countered that it instead “levels theplaying field” between state and federal regulators, granting theNCUA equal authority in protecting the share insurance fund.

Fortney said while she appreciated the sentiment, she willreserve judgment regarding how the rule may threaten stateregulator authority until she sees how the rule is implemented.

During the meeting, the NCUA board also approved an increase in the maximum asset threshold for a “small creditunion” to $50 million, and increase over the regulator's proposedrule of $30 million.

Other approved items include an extension of the time a creditunion make take to accept the NCUA's low-income designation offer;a technical rule change that puts federal deposit insurancecoverage for Treasury accounts on par with other depositoryaccounts; approval of the NCUA's 2013 strategic goals; and abriefing on the interagency final rule increasing appraisalrequirements for higher-priced and higher-risk mortgage loans.