NCUA Chairman Debbie Matz and Board Member J. Mark McWattersexchanged a heated debate during the agency's Nov. 19 boardmeeting.

Hotly-contested issues on the table Thursday included the NCUA'stwo-year budget plan, a field of membership changes proposal –which the incoming American Bankers Association president attacked on Wednesday – and changes to the overhead transferrate delegation.

During a discussion of the agency's proposed two-year budgetplan, Matz explained the need to hold off on moving to an 18-monthexamination cycle was, in part, due to recently proposed andfinalized rules. The combined operating and capital budget,which passed on a two-to-one vote, will be more than $300 millionfor 2016 and will rise to $316 million for 2017.

McWatters read a lengthy statement outlining his concerns withthe budget, calling into question the validity that the NCUAstarted the budget at zero dollars and built it up from there. Healso questioned the efficacy of waiting to implement an 18-monthexamination cycle until after the RBC rules go into effect in 2019,and added the NCUA should work to reduce its budget and improvetransparency for the budget process.

In addition, he said the board has failed to engage both itsmembers and board in a dialog on the budget process.

“The NCUA can and should reduce the operating budget and improveits budget process,” McWatters said during the conclusion of hisstatement, which lasted nearly half an hour. He called the agency'sefforts to fund its operations “misguided.”

NCUA Vice Chairman Rick Metsger later attempted to clarify thatthe board never actually had a budget hearing, but instead held abudget briefing. He said any attempt to hold a hearing would beakin to micromanaging the budget process.

After McWatters' statement on the budget, Matz said, “There's somuch misinformation in that statement, I won't even attempt torefute all of it.”

She said McWatters' claim that the agency is “shutting the door”on an 18-month cycle is erroneous.

“We are looking at an extraordinary amount of reg relief, it'sinappropriate and irresponsible to do reg relief and increase ourexam cycle,” she added.

The exchange heated up as Matz continued to address some of theconcerns McWatters raised.

“It's rather extraordinary to be accused of manipulating ourexam hours to influence the OTR,” Matz said. “I have to say I amnot totally shocked by that, for questioning the integrity of theagency.”

“I didn't say that,” McWatters said.

“Yes, you did, by inference,” Matz said.

“I did not say that,” McWatters countered.

Matz also addressed McWatters' discussion on dialog with theboard, stating that if McWatters is not “getting that, perhaps it'syour lack of participation and not the staff's.”

McWatters further criticized the agency, adding the credit unioncommunity is “tired of these vague promises.”

“It's interesting that you set yourself up as the spokesman forthe credit unions,” Matz interjected.

“I don't recall doing that,” McWatters replied.

Matz later told McWatters that he does not attempt to understandthe issues, how the examination process works, or why some of theagency's decisions are made in the interest of safety andsoundness.

“Any board member who wants information from the staff, you willget it,” Matz said. “You might not agree with it, but you will getas much information as you want, on any subject that you want. Andclearly some of the things said here today, without a doubt, youhave no understanding about some of the issues that you arecriticizing.”

The board concluded by passing each of the budget agenda itemsby a two-to-one vote, with McWatters voting nay eachtime.