Sen. Richard Shelby (R-Ala.), chairman of the Senate BankingCommittee, asked Larry Fazio, NCUA director of examination andinsurance, why the NCUA is not permitting stakeholders to commenton the agency's budget during a public hearing.

Shelby also asked the NCUA why it paid an outside law firm for alegal opinion of its risk-based capital proposal instead of relyingon its own general counsel. The senator's questions were inresponse to Fazio's testimony at a recent regulatory relief hearing in the Senate Banking Committee.

In the letter to Fazio, Shelby referenced NCUA Board Member J. Mark McWatters'vote against the NCUA's 2015 operating budget and his support forbudget hearings.

“Board Member J. Mark McWatters dissented from the adoption ofNCUA's 2015 budget and stated that the NCUA Board should permitpublic input on NCUA's budget. Since NCUA's budget is funded bymandatory contributions from the credit union community, why notpermit members of the credit union community to comment on NCUA'sbudget at a public hearing?” Shelby asked Fazio in a follow-upletter to the Senate Banking Committee hearing on Feb. 10.

McWatters has called for the NCUA to hold budget hearings andallow stakeholders to view the NCUA's operating budget before thefull board vote.

Shelby also referenced McWatters' vote against the agency'srevised risk-based capital rule proposal. McWatters said the agencydoes not have the legal authority to implement a two-tierrisk-based net worth standard.

Shelby asked Fazio why the NCUA chose to pay an outside law firmfor a legal opinion rather than seek legal advice from its owngeneral counsel.

McWatters has called the $150,000 Paul Hastings LLP legalopinion a waste.

“As a practicing attorney, I have served on the legal opinionscommittee of large cross-border law firms and note that a 'could'opinion represents a relatively modest standard of assurance. Inthe obscure, arcane and highly technical and nuanced world of legalopinions, key words such as 'could,' 'would,' 'should,' and 'morelikely than not' truly matter,” McWatters said.

NCUA Board Chairman Debbie Matz said she solicited 11 law firmsaround the nation to review the legality of establishing a two-tierrisk-based net worth standard for the credit unionindustry.“Because this issue is so fundamental to the risk-basedcapital framework, I concluded that the agency should not moveforward with a rule until we received an independent legal opinionfrom an outside counsel analyzing our authority,” Matz said at theNCUA's monthlyboard meeting Jan. 15 when the revised risk-based capitalproposal was approved. “I solicited the independent legal opinionin order to perform my own due diligence.”