Linda McFadden, president/CEO of the $154 million XCEL FederalCredit Union in Bloomfield, N.J., told a congressional committeeTuesday that many credit unions are afraid to bring theirregulatory concerns to the NCUA.

“They came out with a [risk-based capital] proposal that was sooff the wall that they knew it was going to cause a stir within thecredit union movement,” McFadden said at a Senate Banking, Houseand Urban Affairs committee hearing.

Instead of getting credit unions involved in the process, makingadjustments and re-proposing the rule, McFadden said the agency isdoing everything alone.

“That's not a collaborative working environment. So when theydraw lines in the sand like that, credit unions are afraid to comeforward and take their issues to the NCUA because they know theyare very closed minded about it,” McFadden, who testified on behalf of NAFCU, told Sen. JerryMoran (R-Kan.).

She also questioned why the agency has not used its waiverauthority for member business lending.

“They have the ability to use a waiver for member businesslending. They don't exercise that right. That's just one of thenumber of things that they have at their disposal that they justfail to use,” McFadden said.

“They have those tools in their toolbox but they never pull themout, or if they do, the waiver process is so complicated and solong, I've lost that member business loan before I ever had achance to book it because the process took too long,” sheadded.

CUNA Chairman Dennis Pierce, president/CEO of the $2 billionCommunityAmerica Credit Union in Lenexa, Kan., said the NCUA'sproposal does not properly evaluate the risk-based nature ofcapital.

“It doesn't include access to supplemental capital or otherresources that I think would be a great add for credit unionmembers so I think they try but I don't think they get there,” hesaid.

Larry Fazio, director of the Office of Examination and Insuranceat the NCUA, told the committee on Tuesday the NCUA should haveexamination and enforcement authority over third party credit unionvendors.

“They're not only examining once, but they're examining it withevery credit union that uses that CUSO, so why do they need tooverstep the bounds and go into that entity and review them again.Is not reviewing them five or six or 10 times not sufficient?”McFadden said.

Piece said most third-party vendors do not pose a huge risk tocredit unions.