CUNA's 18-member Examination and Supervision Subcommittee willtake the lead in writing the trade association's comment letter onthe NCUA's proposed derivatives rule, Senior Vice President MaryDunn said Tuesday during a press call.

The subcommittee is led by Chair Brett Thompson, president/CEO of the Wisconsin Credit UnionLeague, and Vice Chair Rick Pillow, president/CEO of the Virginia Credit Union League.

The group met with NCUA Director of the Office of Examinationand Insurance Larry Fazio on May 21, Dunn said, and has scheduled afollow-up conference call for early June. The NCUA Board proposed the rule during its May 16 board meeting. Iffinalized, it would grant investment authority for plain-vanilladerivative swaps and caps to qualifying credit unions with morethan $250 million in assets.

The proposed rule generated criticism because the NCUA also presented a possible feestructure to pay for the additional administrative and examinationcosts associated with the authority.

Application fees could range from $25,000 to $125,000; creditunions could also pay ongoing fees to cover the costs of additionalexamination time.

The regulator is considering the fees because it estimatesderivatives authority could cost it as much as $16 million during the first three years, depending upon howmany credit unions apply for it.

While Dunn said the NCUA doesn't have the proper expertise onstaff to set up and examine the program, she has heard from sourcesthat include some within the NCUA who have said the “costs do seemto be a bit high.”

The NCUA said when it proposed the rule that it estimatedbetween 75 and 150 credit unions will apply for derivativesauthority. However, CUNA Chief Economist Bill Hampel said he wouldbe surprised if more than 100 credit unions do so. While stressinghe was just surmising a number, he said he thinks the actual numberof participating credit unions will be closer to 50.

“Only a few hundred are eligible,” Hampel said, “And some willlikely say it's not worth the expense or going to the trouble ofdoing the trades.”

Other members of CUNA's Examination and Supervision Subcommitteeinclude Michigan Credit Union League President/CEO Dave Adams,NuVision FCU CEO Roger Ballard, Kemba Credit Union President/CEOSteve Behler, Metro Credit Union President/CEO Robert Cashman,Desert Schools FCU President/CEO Susan Frank, American Airlines FCUGeneral Auditor Sean Gaven, Pacific Northwest FCU President/CEO TomGriffith, Altura Credit Union President/CEO Mark Hawkins, Community First Credit Union President/CEO John Hirabayashi,Evangelical Christian Credit Union and NuVision FCU board memberJim LePere, Greater Nevada Credit Union President/CEO Wally Murray,USFCU President/CEO Bill Raker, Digital CU CEO Jim Regan, PearlHarbor FCU Chairman Gordon Sam, Amplify FCU President/CEO PaulTrylko and Vision Financial Credit Union President/CEO MichaelWaylett.