NCUA board members battled tit for tat Friday as Chairman DebbieMatz and Board Member J. Mark McWatters accused each other ofrevealing confidential details from a legal opinion supporting the agency's authority to requirerisk-based capital standards.

In a series of releases and footnotes to the Jan. 15 boardmeeting statements posted on the NCUA's website, Matz and McWattersdebated how details from the opinion from Washington law firm PaulHastings were made public.

In a footnote added Thursday to her January board meetingofficial statement posted on the NCUA's website (shownabove), Matz accused McWatters of violating a confidentialityagreement with the firm when he sourced the written opinion in hismeeting statement.

McWatters, who voted against the revised risk-based capitalproposal, read the statement out loud during the Jan. 15meeting.

“The board received an oral opinion from the Paul Hastings lawfirm, which provided support for our decision to proceed with thetwo-tiered approach. Subsequent to the oral opinion, the firmprovided a privileged, substantive written opinion,” Matz wrote inthe footnote.

“My statement during the open meeting on January 15, 2015clearly and deliberately referred to the oral opinion. Regretfully,Board Member McWatters quoted directly from the firm's writtenopinion during the open meeting and, in so doing, violated thefirm's policy regarding the confidentiality of that opinion.”

Matz said she had planned to release the written opinion at theJan. 15 board meeting, but received a letter from the law firm Jan.12 that refused, detailing the confidentiality agreement. Thatletter is shown at left; click to expand.

Read more: McWatters responds …

McWatters responded Friday in an addendum posted online to hisboard meeting statement that refuted Matz's accusation. Thethree-age addendum is shown at left; click to expand.

McWatters said it was Matz who violated the non-disclosureagreement.

“By the time I spoke at the board meeting 'the cat was out ofthe bag' as the key legal conclusion of both the oral legal opinionand the written legal opinion of Paul Hastings was already in thepublic domain. I merely commented on what had been disclosed by thechair,” McWatters wrote.

He also called the chairman's statement a dubious position thatreflected the form over substance legal trap.

“When the chair disclosed the substance of the oral legalopinion at the board meeting she also disclosed the substance ofthe written legal opinion. She can't hide behind the form ofthe advice rendered. It's a difference without a legal distinction.The substance of each legal opinion is the same, and substance –not form – is covered by the non-disclosure agreement,” headded.

Matz followed up in a Friday release, explaining Paul Hastingsverbally agreed Matz could reference the oral opinion at the boardmeeting.

“The oral legal opinion maintained that while certain parts ofthe Federal Credit Union Act are arguably ambiguous, it did supportour proceeding with a two-tier risk-based capital frameworkcomparable to the banking agencies—with one threshold to beadequately capitalized and a second threshold to bewell-capitalized,” Matz wrote in her official Jan. 15 statement andagain Friday.

However, she added, the NCUA was contractually obligated to keepthe firm's written opinion confidential.

Also on Friday, Matz released the letter requiringconfidentiality from Paul Hastings, as well as a copy of the legalopinion.

McWatters also said Matzwasted money on the legal opinion, which only provides modestsupport for a two-tier risk-based net worth system.

“The chair's accusatory statement directed at me is nothing morethan an attempt to obscure the true issue at hand – she directedNCUA to waste $150,000 of credit union funded resources to obtainan opinion that offers modest support for a two-tier RBNW system,”he said.

“With so many critical issues facing the credit union communitytoday, the ongoing attempt by the chair to discredit my efforts toprovide meaningful transparency and inform credit unions of what istaking place within NCUA demonstrates a sad state of affairs at theagency,” McWatters added.