Sept. 6, 2010


Comments

 
 
 
  • Why did the eight natural person credit unions withdraw their suit and what did they get in return.
    Bruce Cramer
     
     
     
  • Very well done Chip! It is known fact within NCUA that the Corporate Examiners were and probably still are "over their heads" when it comes to dealing with Corporates. The Corporates were calling the shots not them...now it pay back time. It is all about the power for them now so let remember that famous but true saying..."power corrupts and absolute power corupts abolutely"!
    mad
     
     
     
  • Even with their own CEO being sued by the NCUA for negligence and incompetence, CUNA remains mute regarding NCUA's incompetence in the handling of the corporate situation and their attempt to place credit unions at the mercy of Bankers for liquidity. This is clearly an Administration agenda, so of course the NCUAB stands behind it, but why does our trade association stand behind it?
    nottheblogger
     
     
     
  • Mr. Filson,

    I would have to say that from the nine possible explanations why the NCUA did re-file the law suit against former officers and directors, it had to be number 7, "it's just regulatory theater".

    It is simply their egocentricity, narrow-minded, unreasonable and out of touch-with-reality ways; just as you said, to show, the industry leaders, especially the ones that are critical of their actions, that as regulators, they can exert their authority whenever, and however they best see fit and upon whoever dares to be critical of their actions without regard of any dire intended or un-intended consequences their actions bring upon the defendants behind this frivolous law-suit.

    Nevertheless,Let’s give the NCUA credit when credit is due. Their actions have worked, for the tone of credit union leaders have gone almost silent when it comes to opine in a critical manner about the actions of the NCUA or even question the agency.

    Examiners are very inconsistent in their interpretations of the rules and requirements, many field examiners make unreasonable and burdensome requirements of credit unions through their silly DORs and findings while conducting their exams. CEOs and volunteer directors are running scared. Congratulations NCUA, you achieved your goal.

    Since the very beginning, I always asked myself this question, will the NCUA ever be transparent enough and disclose the true impact/losses of the so called investments that led to the demise of the corporates?

    Today, I ask myself, will they ever come forward and say we were just as much at fault; will they ever say we granted the corporates all this expanded authority and we failed to see the risks; or will they continue on with this vendetta that as you concisely point out the only ones who will collect will be lawyers.

    Last, is it wise and good practice to place the fate of the entire credit union industry in the hands of just three individuals?

    Al Maldini
     
     
     
  • Mr. Filson,

    I would have to say that from the nine possible explanations why the NCUA did re-file the law suit against former officers and directors, it had to be number 7, "it's just regulatory theater".

    It is simply their egocentricity, narrow-minded, unreasonable and out of touch-with-reality ways; just as you said, to show, the industry leaders, especially the ones that are critical of their actions, that as regulators, they can exert their authority whenever, and however they best see fit and upon whoever dares to be critical of their actions without regard of any dire intended or un-intended consequences their actions bring upon the defendants behind this frivolous law-suit.

    Nevertheless,Let’s give the NCUA credit when credit is due. Their actions have worked, for the tone of credit union leaders have gone almost silent when it comes to opine in a critical manner about the actions of the NCUA or even question the agency.

    Examiners are very inconsistent in their interpretations of the rules and requirements, many field examiners make unreasonable and burdensome requirements of credit unions through their silly DORs and findings while conducting their exams. CEOs and volunteer directors are running scared. Congratulations NCUA, you achieved your goal.

    Since the very beginning, I always asked myself this question, will the NCUA ever be transparent enough and disclose the true impact/losses of the so called investments that led to the demise of the corporates?

    Today, I ask myself, will they ever come forward and say we were just as much at fault; will they ever say we granted the corporates all this expanded authority and we failed to see the risks; or will they continue on with this vendetta that as you concisely point out the only ones who will collect will be lawyers.

    Last, is it wise and good practice to place the fate of the entire credit union industry in the hands of just three individuals?

    Al Maldini
     
     
     
  • Chip, keep digging and maybe we will get the rest of the story. Did the NCUA do this to get the individual credit union lawsuit to go away?
    Larry Morgan
     
     
     
  • YES - this is what a lot of us are asking. CUNA is on it's way out. We buy any product but theirs. We can't afford CUNA any more.

    nottheblogger typed:

    "Even with their own CEO being sued by the NCUA for negligence and incompetence, CUNA remains mute regarding NCUA's incompetence in the handling of the corporate situation and their attempt to place credit unions at the mercy of Bankers for liquidity. This is clearly an Administration agenda, so of course the NCUAB stands behind it, but why does our trade association stand behind it?"



    TruthHurts
     
     
     
  • All of this reminds me of what I heard from a Region Director a couple of years ago: Credit Unions assert that we (NCUA) are always either too early, or too late...
    Kelly Schermerhorn
     
     
     
  • What better place to resolve who did what than a court of law? Maybe the officers and directors do not have clean hands as the article leads you to belive. and if NCUA contributed to the problem, let the record show it. As they say in Vegas, "let the chips fall where they may"
    Jody Major
     
     
     
  • Who knows why NCUA does things, they certainly are not transparent in their actions. These corporates were obviously beyond NCUA's regulatory capabilities and the elimination of Wescorp will not change this. If Wescorp is eliminated as an entity, who fills this void? And doesn't that pose a new concentration risk? Why not convert these Corporates to FDIC coverage where the regulator presumably is more adept at regulating large institutions?
    Tim
     
     
     
  • Excellent article Chip. However, isn’t it a possibility that the natural credit union CEO’s only agreed to drop the lawsuit if NCUA took on the fight? Reason being, it was NCUA directive to oversee the risk levels at Wescorp. When Wescop failed and Wescorp management misled members up to the day of failure (alleged by lawsuit), shouldn’t NCUA be the one to go after directors that misled members?
    Steve
     
     
     
  • Great analysis of the situation. It is sad that the NCUA is ignoring their own culpability in not seeing the disaster that came, but expected others to have seen the disaster. Instead of working to avoid these kind of problems in the future they now want to deflect the blame away from them. It seems that they are reaching in this suit.
    Stuart Weiner
     
     
     
  • The credit union system should welcome a trial. Buts lets be clear about who will be on trial. The management and Board of Wescorp are certainly on trial. But the witness box will also be reserved for NCUA. If Wescorp Board and Management are well represented at trial, they will put NCUA on trial. My guess is that there is plenty of blame to go around. I would welcome a thorough and adversarial review of what happened.

    The financial crisis caused most of the damange. But management and the Board are responsible for having a business plan that protects the organization against bad times as well as allowing it to grow in good times. Management will have to show that it had such a plan.

    I recall a presentation to our Board by Bob Burrell, the chief investment officer of Wescorp. He showed our Board how Wescorp had invested its money. The crux of the presentation was that Wescorp had invested in strong securites that were protected by over collateralization and other means to sustain many times expected losses. The financial crisis produced losses higher than that what management reasonably expected.

    What about NCUA? NCUA conducted numerous examinations before the crisis that should have identified all of the problems that NCUA now alleges. It will be interesting to see what the examiner's work papers and examination reports said about what are now allegations against the Board and management of Wescorp.

    If the Wescorp CEO was not attending to his job then we would expect to have seen very low ratings for the M portion of the CAMEL rating and serious examination findings. Similarly if the Board was not doing its job of overseeing investment policies and procedures there would have been written warnings and follow up examinations to verify corrective action. NCUA says that debt levels were too high so there will obviously be many examination findings that are critical of debt levels. And we will surely see many examples of warnings from NCUA to natural person credit unions of serious problems in the corporate system.

    Lets rejoice that NCUA is finally giving us chance to lift the curtain of secrecy and see how well the NCUA is performing. I paraphrase Chairman Fryzel in saying, "Now we will finally hear the facts.". We will find out if prompt correction action really exists. We will find out if examination procedures are effective and if the examiners are well trained and properly managed.

    The lawsuit has given us many reasons why Bob Siravo and the Board failed to do their duty. But lets remember that Kent Buckam and the corporate examiners were also responsible to note deficiencies and to take prompt corrrective action. Some of us have heard about the discord within NCUA between Owen Cole and Kent Buckam about whether or not the corporate system was headed for trouble. I look forward to knowing more about that and everything that NCUA did or did not do to take prompt corrective action and to determine that the corporate system was safe and sound.

    This trial will shine a light on everyone who was involved. Bob Siravo and the Wescorp Board deserve their day in court. I hope they take advantage of this trial to shine a light on NCUA. The new corporate regulation will not prevent the next crisis just like NCUA rule 704 did not prevent this crisis. The reason is unclear--but I strongly assert that a more transparent examination process would help prevent future problems more than any solution now proposed by NCUA or the industry. The best way to do that is make the examination reports public. Prove that prompt corrective action exists and that the money we pay for supervision and examination is well spent. My guess is that both sides made mistakes. The finger so far has only pointed to management and the Board. I am sure the trial will change that.

    Henry
    Henry Wirz
     
     
     
  • Fraud will be a very difficult case to win, if not impossible. My guess is that its just for show so they can say they tried when they know they will ultimately fail in winning the case.
    Tim Richey