The National Credit Union Administration is still actively supporting Patelco Credit Union's internal investigation of alleged management abuses.
Earlier this year, when the agency originally supported the probe, Patelco was seeking a merger with a federally chartered credit union.
The continuing role angers some within the agency. They think it shouldn't be involved, because the San Francisco credit union is chartered by the state of California.
"The agency has no business sticking its nose into it," said an NCUA source who requested anonymity. "It should be left to the state."
The NCUA plans to participate in a hearing scheduled for Friday in San Francisco County Superior Court on motions from Patelco's board and its supervisory committee, which are seeking preliminary injunctions against each other.
The federal regulator is expected to file a brief for the hearing backing the supervisory committee's right to investigate the allegations against Patelco management.
"I think we're duty bound to respond," NCUA General Counsel Robert M. Fenner said in an interview.
Patelco is engulfed in a feud between its supervisory committee, which wants to be free to investigate a range of allegations, and the board, which has argued that it should specify the scope and costs of any investigation.
The allegations the committee wants to investigate range from forgery to employee intimidation and are based on testimony from board members and anonymous employees, according to court documents.
The documents indicate that Patelco board member Robert Wenzel's signature was forged on a survey to the membership that touted a proposed merger with First Technology Federal Credit Union. Then the acting chairman, Mr. Wenzel did not support the merger.
But the board charges the committee is being used as a tool by Mr. Wenzel and another board member, both of whom would have lost their posts as directors if the merger had gone through.
The NCUA first backed a probe by the committee in February, when the $1 billion-asset institution was seeking to merge with First Technology. The two credit unions withdrew their merger applications, however, on March 3.
Mr. Fenner, the federal regulator's counsel, wrote letters March 8 and March 10 to Louisa Broudy, assistant commissioner in the California Department of Corporations, which regulates credit unions.
In the letters, he asserted that the supervisory committee should be allowed to investigate the allegations unimpeded. He also expressed alarm that state law and bylaw violations related to the credit union's March 21 annual election might be designed to topple two members of the supervisory committee.
Ms. Broudy apparently took the letters to heart; on March 10, she told Patelco's board to let the supervisory committee proceed, and on March 14, she told it not to hold the election.
Mr. Fenner said the agency was behaving properly in communicating with the California regulator.
NCUA involvement is likely to continue. The agency has pledged to extend protection under a federal whistleblower provision to any employee who comes forward to the supervisory committee, Mr. Fenner said.
