The NCUA should withdraw or delay a proposed rule that would prohibits certain incentive-based compensation packages, most credit unions that weighed in on the regulation said in comments, which were due Friday.

NAFCU President/CEO Dan Berger wrote, echoing many of the comments, “NAFCU urges the National Credit Union Administration and other federal financial regulators to substantially revise this rule in acknowledgement that it should not apply to credit unions, is overly broad, and lacks requisite clarity and guidance for good-faith compliance.”

The rule, which all financial regulators were required to issue, prohibits incentive-based compensation arrangements that would encourage inappropriate risks by providing excessive compensation or that could lead to material financial loss. Affected institutions will be required to annually create and retain records documenting the structure of incentive-based compensation arrangements for seven years. Further, the proposal requires board members to provide direct oversight of compensation, including approval of all senior executive compensation plans and any material adjustments.

It will apply to all financial institutions, including credit unions, with total assets of $1 billion or more. It is estimated that it will impact only a small percentage of credit unions – a total of 258, or nearly 5% of all credit unions.

“Forcing credit unions to be part of this proposed rule is unnecessary and will only result in additional costs with no practical benefit,” wrote Michael McDermott, president/CEO of the Metro Credit Union, an Omaha, Nebraska-based credit union with  $290 million in assets.

Michael D. Poulos, President/CEO of the Michigan First Credit Union was blunt in his criticism.

“Every problem does not have a regulatory solution,” he wrote. “In fact, as this issue points out, every problem is not necessarily even a problem.” Michigan First is headquartered in Lathrup Village, Mich. and has about $787 million in assets.

But one credit union official supported the rule. Marsha Brauer, CEO of the Clarence Community & Schools Federal Credit Union said she does not believe that employees should receive incentive-based compensation. “This is why the mortgage breakdown happened,” she wrote. “Employees are hired to do a job at a salary suited for that position.” The credit union is located in Clarence, N.Y. and has assets of about $20 million.

Several groups—including the ABA—gave the NCUA a backhanded compliment in commenting on the proposed rule. The NCUA was the first to issue the proposed rule and gave credit unions 90 days to comment. That period ends today, July 22. However, when other financial regulators subsequently issued their proposals, they also set a July 22 deadline, meaning non-credit union commenters had less time to comment. Those groups, including the U.S. Chamber of Commerce, asked for a minimum of 150 days to comment on the plan.