NACUSO has created an advocacy fund in response to the NCUA'sCUSO rule, and is considering a lawsuit against the regulator.

“Together, our participation in collaboration advocacyefforts through NACUSO will be our most effective way of impactingthe future regulatory environment under which CUSOs operate, fromthe impact of the CUSO Rule to the risk based capital requirementfor CUSOs,” NACUSO President/CEO Jack Antonini and theassociation's board of directors wrote Wednesday in a letter tomembers and supporters obtained by CU Times.

To raise money for the fund, NACUSO suggested donation amountsbut the association encouraged members and non-members tocontribute at levels they can afford.

“A significant number of contributors, even if the amounts aresmall, will be just as important to our collective mission as thosewho are able to give contributions of $25,000,” the lettersaid.

NACUSO said its stated goal is to maximize the percentage ofCUSOs and their credit union owners the association represents whennegotiating with NCUA.

NACUSO said it plans to use the advocacy fund to form andpresent its message to individuals in positions of power with thegoal of changing the regulatory climate.

“This includes the hiring of professionals such as attorneys,lobbyists, public relation specialists and economists. Thefund will also cover travel expenses of NACUSO representatives andindustry leaders to meet with lawmakers and regulators,” the lettersaid.

Whether or not NACUSO is going to sue the NCUA over the CUSO rule is listed among the frequently asked questions at thebottom of the letter.

“The short answer is that a final decision has not beenmade. Suing the regulator is a step that should not be takenlightly. We are in the process of discussing the industry'sconcerns with NCUA and will evaluate their response,” the lettersaid.

According to Antonini, the advocacy fund is needed since theNCUA has increased its efforts in Congress to regulateCUSOs.

“NCUA has stepped up its direct examination of CUSOs. There is no real difference in the scope of a CUSO exam and creditunion exam in the minds of many of the examiners,” the letter said.“Having a few meetings a year with NCUA is no longer sufficient toprotect the regulatory climate for CUSOs. The pressureshave increased and so must our response.”

NCUA Public Affairs Specialist John Fairbanks said the agencyhad no comment regarding the announcement.

The NCUA's CUSO rule was finalized in November 2013.It requires CUSOs that offer complex or high-risk servicessuch as credit and lending, information technology, and custody,safekeeping and investment management services to report moredetailed information, including financial statements and generalcustomer information. While the rule went into effect June 30, thereporting requirements won't start until Dec. 31, 2015.

NACUSO has been critical of the NCUA's proposed risk-basedcapital rule, saying the risk weighting of 250% assigned toinvestments in CUSOs is arbitrary, not supported with any empiricaldata and counter-productive to the collaborative risk mitigatingmodel that CUSOs represent as a net income resource for creditunions. The NCUA has said it will make major adjustments to riskweights in its final rule.