The $1.1 billion in contingency legal fees paid by the NCUA relating to failed corporate credit unions exposes the “rank incompetency” of the agency, Camden Fine, president/CEO of the Independent Community Bankers of America said Thursday.

“The NCUA utterly failed to negotiate competitive terms for legal services and allowed itself to be bilked,” Fine said in a letter to Rep. Ann Wagner (R-Mo.), chairman of the House Financial Institutions Oversight and Investigations Subcommittee.

The NCUA declined comment on Fine’s letter.

Wagner has been investigating the propriety of the contingency fees the NCUA has paid for lawsuits seeking damages relating to the failed corporate credit unions. The fees paid to two firms, Korein Tillery and Kellogg, Huber, Hansen, Todd, Evans & Figel represent 23.2% of the amount recovered.

NCUA Board Chairman J. Mark McWatters said earlier this week that the fees had been excessive and attempts to renegotiate them have been unsuccessful. He said he and board member Rick Metsger had not been parties to the decision to pay contingency fees. However, Metsger has defended the fees, saying that money would not have been recovered if the agency had not been willing to make the investment.

The law firms have not responded to a request for comment on McWatters’ statement.

In his letter to Wagner, Fine said that at the time that the agency incurred the legal expenses, it was supported by a draw from the U.S. Treasury.

However, the NCUA has said it has repaid any money owed to the Treasury.

Fine said that “that this episode exposes the rank incompetency of the NCUA. The agency’s failure to manage its legal expenses is on a par with its failure to oversee the speculative activities of corporate credit unions.”

Fine goes on to say that the NCUA has allowed credit unions to grow their membership and markets well beyond their statutory mission.

“Frankly, we fear that the NCUA is in over its head in overseeing an increasingly complex and concentrated industry,” Fine wrote.

And he concluded the letter with a request of a comprehensive review of credit unions and the industry’s “outmoded tax exemption.”