Feb. 12, 2013 – NCUA Inspector General William DeSarno told House Oversight and Governemnt Reform Chairman Darrell Issa, R-Calif., that NCUA’s use of contingency fee contracts in its role as conservator of two failed corporates was exercised with extreme care and that the costs appear reasonable.
DeSarno, writing Issa in response to questions raised last fall, also said a presidential executive order against the use of contingency fee contracts with outside attorneys did not prohibit the activity as it pertained to NCUA’s activities as conservator of U.S. Central Corporate FCU and Western Corporate FCU.
“[T]he NCUA as Conservator succeeds by operation of law to all the rights, powers, and duties of the credit union,” DeSarno wrote. Citing case law, he said the conservator “has the same authority to hire outside counsel on a contingency fee basis that the credit union possessed before the NCUA was appointed Conservator. Moreover, when the Conservator contracts for legal services, such services are not provided ‘to or on behalf of the United States’ within the meaning of the executive order.”
The OIG letter is posted on NCUA’s website.