ALEXANDRIA, Va. — A flawed rule is why NCUA Board Member MichaelFryzel cast a “no” vote for the first time in more than five years,he said during a video interview with Credit Union Timesafter the agency's December meeting.

“This was my first 'no' vote in five-and-a-half years on theboard and I felt compelled to do that because I think the rule, theproposed rule, as written is flawed,” Fryzel said of the proposed rule now up for comment that would seek to eliminatehome offices for credit unions.

He specifically objected to rules being changed for federalcredit unions but not state charters.

More Video CUTs from Dec. 12 Meeting:
Matz Says 'No' to Home-Based CUs
MetsgerExplains His Positions

“We need to provide that protection, not only to ourfederal examiners at our federal credit unions but when they gointo state-chartered credit unions, along with the examiners fromthe states going into them, that they are fully protected, thatthey can take the exam outside the house,” Fryzel said afterThursday's meeting.

“They don't have to be concerned about going in. If they have togo in, they go in with the understanding that they're protected,”he said.

Fryzel noted that many credit unions started in homes.

“Some of these credit unions that are still located in homes,they don't want to grow. They don't want to get any bigger. Theydon't want to take in any new members. They're serving a distinctfield of membership and their members apparently are very happywith it,” he said.

“For us to say to them, 'Now take this and put this in acommercial store' is wrong. If they are safe and sound, if they'reoperating as a financial institution should operate, we should haveno problem with that.”

NCUA Board Chairman Debbie Matz told Credit Union Timesthat the time has come for home-based credit unions to move out oftheir homes.

“I don't believe that examiners should be going into somebody'sprivate residence to examine their books. We've had examiners whohave been bitten by dogs. We've had examiners working in conditionswhere they can't control the thermostat so it's very cold inwinter, very hot in summer. In some cases, they're not allowed touse the restroom at the home,” she said.

“I would not want to work under those conditions. I don't knowanybody else who would and we shouldn't impose those conditions onour examiners,” she said. “So there are two very distinct reasonswhy I think it's time for home-based credit unions to move out oftheir homes and move into accessible commercial facilities.”

Fryzel said some home-based credit unions that cannot afford tomove to a commercial space could be forced to merge orliquidate.

“It's a decision the credit unions will have to make if itbecomes final. I'm hoping that there will be significant changes orat least that the general council will be able to see that perhapswe don't have that authority and we should leave well-enoughalone,” he said.

Fryzel also told Credit Union Times that he expects therisk-based capital rule to come before the board in the first quarter of 2014.

Watch the full interview with Fryzel above.