Sorry for the slog on this. Have to dig some trenches and lay a foundation, will pick up the pace. Here's what you have seen: ✅ 1) 2008 U.S. financial collapse - working folks get clobbered, guilty parties and regulators go free; ✅ 2) Corporate credit unions collapse costing CUs $6 billion; ✅ 3) An expansionist, open membership $26 billion Wescorp is the cause for most of the $6 billion loss: ✅ 4) Federal regulator NCUA closes bankrupt Wescorp.
The National Credit Union Administration (NCUA) is the federal agency empowered to regulate and insure credit unions in the U.S. NCUA had full oversight of Wescorp prior to the 2008 collapse and managed the liquidation of Wescorp after the debris hit the fan.
When a credit union fails causing a large financial loss, NCUA is required to prepare a "Material Loss Report", analyzing the causes of the failure. These audit/reviews are conducted by NCUA's Office of the Inspector General (OIG)
Here are a few excerpts from the executive summary of the OIG material loss report on Wescorp:
We determined WesCorp management‘s actions contributed directly to conditions that
resulted in NCUA placing the corporate under federal conservatorship and an expected
loss to the Stabilization Fund of $5.59 billion.
✅ Why NCUA Conserved Western Federal Corporate Credit Union
WesCorp‘s management and Board of Directors (management) did not implement
appropriate risk management practices to adequately limit or control significant risks in
its investment strategy.
We determined WesCorp management created significant concentration risk, credit risk, market risk, and liquidity risk by overexposing its investment portfolio to privately-issued securities (1) in a single market sector; (2) in a single geographic real estate market; (3) in a higher risk subordinated class; and (4) collateralized largely with higher risk underlying residential mortgage collateral.
✅ NCUA‘s Office of Capital Markets Role in Evaluating Investment Activity
The Office of Capital Markets (OCM) develops agency policies and procedures related to credit union investments and asset liability management. OCM also assists examiners in evaluating investment and asset and liability management issues in credit unions and provides expert advice to the Board on investment issues.
Corporates qualifying for Type III supervision (Wescorp met the requirements of Type III supervision) will be assigned a capital markets specialist (CMS) from OCCU on a full-time basis. Maintaining an on-site presence promotes interaction with the corporate‘s staff and allows the CMS to maintain a working knowledge of the corporate‘s operations, especially in the capital markets areas (investments, asset and liability management, risk monitoring, etc.). The knowledge gained through on-site supervision allows the CMS to more effectively monitor and evaluate financial changes.
❓ Is there any doubt in your mind about what NCUA's Inspector General (Chief Auditor) thought caused the losses and bankruptcy at Wescorp? By the way, if you would like to read the full report here's the link [link Wescorp material loss] - it's been on the NCUA website since 2010!
❗Mr. Jim Hayes spent @ 10 years of his career at Wescorp - prior to Wescorp's 2010 liquidation - in Wescorp senior management and onsite regulatory positions.
... is that what really happened?
Western Federal Corporate Credit Union
you see the BOD and JH were partners in everything that has went down. No two ways about it. These aren't dumb people just greedy and don't care who they harm in their quest.
ReplyDeleteThe board is comprised of volunteers who are not paid for the job, so I don't understand why they're having such a hard time admitting a mistake was made by hiring Jim Hayes!
ReplyDeleteWe've all made mistakes, it's part of life, but sticking your head in the sand and refusing to acknowledge a bad decision simply escalates the situation into them now being questioned whether or not they're fit for their unpaid position!
No. They are not fit for a position on the board of NCSECU, an institution that stood for integrity for 85 years.Let them go be on a bank board.
DeleteHayes was never really the issue, was he? This Board hired Hayes to do exactly what he did. Did you hear any back pedaling on the new/new? What this Board has done is a lot worse than a "mistake". anything different this week? Chair Ayers gave Hayes effusive praise-- surely didn't have too if he hadn't done what he was hired to do. Change the culture, implement the bank policies that most credit unions have in place. This Board couldn't stand SECU to be complex, and innovative. Makes one question their smarts for sure. Don't think this Board understood the culture or the membership---maybe don't understand cooperative structures, other than tax free advantage. Sure don't understand "Do the right thing." Nope, they like "Kick 'em when they're down." why else implement Risk based lending when SEANC asked them not to,because it would hurt state employees. And then Leigh Brady gives that inane talk to the SEANC Board after she had 2 months to prepare. This Board wants to put all the members data in "the cloud" under the control of some vendor that has wined and dined them and the exec suite. I wonder if the membership could bribe their way back to what it was for the first 85 years. Oh, then we'd be like them and we don't aspire to that. They need to resign. although the 6 that voted for Hayes would be a great place to start. I wonder if any of them have a conscience?
ReplyDeleteI totally agree. This Board needs ousting just like they allowed the ousting of highly respected and dedicated employees. They need to be held accountable for this utter mess we are in. Hayes is gone, thank God! He was only part of the cancer that is spreading though. Annual meeting should be very interesting this year.
Deleteevery year everyone must take an ethics course for employment .... guess in the scheme of things those are only good if you follow them. Also how can equity be administered to the members/employees when you had the most ethical rates possible with everyone getting the same rate no matter who you were or how much money you are worth or who has a parent that can cosign?
ReplyDelete