The federal government has declined to indemnify two regulators being sued by the former head of an Iowa credit union, at least for now.

The National Credit Union Administration's board on Feb. 1 voted 2-1 against indemnifying agency associate regional director Henry Garcia and examiner Mark Treichel at the present time.

But NCUA spokesman Bob Loftus stressed the board had not decided once and for all to let its examiners dangle.

"The board simply chose not to make a decision on it at this time," said Mr. Loftus, the agency's director of public and congressional affairs. "They could come back to it later."

An aide to Robert Swan said the NCUA director, though supporting the principle of indemnification, cast a negative vote because he thought it was too soon for action.

"On the issue of indemnification he feels there's a proper time and place for it and the matter that was brought before him hasn't reached that time yet," said Russell Clark, Mr. Swan's executive assistant. "When it gets to the point where he feels it's the proper time, he will support indemnification, provided they've acted within the scope of their duties."

Shirlee Bowne, the other director who voted against indemnification, was unavailable for comment.

Karl Hoyle, the agency's executive director, was critical of the two directors for opposing NCUA Chairman Norman E. D'Amours on the vote. Mr. Hoyle also supported implementing an indemnification policy for the agency, which it does not now have. The regulator has never had to cover an employee.

But "I feel that if you ask the employee to do a job, you back up the employee," Mr. Hoyle said. "They should be indemnified sooner rather than later."

The Office of the Comptroller of the Currency and the Office of Thrift Supervision have indemnification policies in place.

Mr. Hoyle said the argument that indemnification makes examiners less likely to act inappropriately is not a compelling one .

"Some people say no indemnification makes examiners less likely to cowboy," he said. "I think our employees shouldn't have to prove a negative."

Mr. Garcia and Mr. Treichel are being sued as individuals and as agents of the NCUA by George E. Waddell Jr., former chief executive of First Family Credit Union, Dubuque, Iowa. The credit union has since been merged.

Mr. Waddell is charging that the two regulators illegally ousted him from the credit union. On Jan. 3, Judge Michael J. Melloy of the U.S. District Court for the Northern District of Iowa dismissed a motion by the agency that claimed the examiners were immune to civil suits.

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