NCUA Chairman Debbie Matz said the regulator will ask Congressfor authority over third-party vendors who could threaten creditunions' safety and soundness.

The remarks were published in the NCUA's September newsletter,in Matz's monthly Chairman's Corner column.

“Let's not forget that just days after Lehman's demise, AIGteetered on collapse. The source of AIG's failure was a smalldivision operating outside of the firm's traditional operations andjust beyond the reach of regulators. Dangers to the broader creditunion system could be lurking in such regulatory blind spots,” shewrote.

In early 2012, the NCUA proposed a rule that would require CUSOsto submit financial reports directly to the NCUA. The boardwas scheduled to finalize that rule at its June 2012 board meeting,but canceled that meeting and announced it would delay the finalrule.

Board Member Michael Fryzel, a former attorney, told CreditUnion Times in July he initially questioned whether the NCUA had the legaloversight authority to require CUSO financial reporting, becausesuch authorities are not in the Credit Union Act.

Fryzel said he now agrees with legal opinions that say the NCUAdoes have the authority, and he's over that hurdle.

However, Fryzel said he's also opposed to the cost of CUSOoversight, saying it would cost more than $1 million to set up andmore than $500,000 to maintain each year.

Cut costs, Fryzel said he told NCUA staffers, and this rulemoves. However, he said he has not received a leaner budget. Fryzelwouldn't say if he thinks the rule would be finalized thisyear.

NCUA officials weren't immediately prepared to discuss thevendor legislative effort, but said more information isforthcoming.