Lawyers for the National Credit Union Administration met Tuesday to discuss whether a federal pay freeze proposed by President Obama would apply to raises eyed for agency employees.

The increases, approved last month, would cost $17 million. The proposed pay raises, averaging 5%, were set under a collective bargaining agreement with the National Treasury Employees Union. Salary levels for most other federal employees have not been set for next year.

The NCUA is a self-funded independent government agency, so it comes under different rules than the executive branch, which would be restricted by the freeze.

The NCUA raises, set by a federal arbitrator, have attracted criticism from some credit unions, which would pay for the increases through annual operating assessments and funds from declining earnings on the National CU Share Insurance Fund.

The raises make up the biggest part of a $24.5 million spending increase set for next year and come after the NCUA boosted spending by 13% this year.

President Obama has proposed a two-year freeze on federal pay at an estimated savings of up to $7 billion.

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