Sprinting for the finish....
FROM THE AMERICAN BANKER NEWSPAPER
NCUA Wrestles CUs Over WesCorp Claims
LOS ANGELES – In what could mark the beginning of a major bloodletting in the credit union movement, NCUA is scheduled to face off in federal court here next week with seven credit unions over tens of millions of dollars of potential insurance claims against the officers and directors of WesCorp FCU.
✅ 7 Credit Unions Sue
The claims, which NCUA is seeking to wrestle away from the credit unions, threatens to open all counts of fault lines within the credit union movement because it will put powerful players in the docket for the failure of the one-time $34 billion corporate, which has already cost the movement more than $2 billion.
By challenging the directors’ roles in the demise of WesCorp, the suit threatens to open a rift in the credit union movement just as the cost of the corporate bailout is growing, with NCUA having charged credit unions a $1.1 billion assessment last month to pay for the bailout of WesCorp and U.S. Central.
✅ NCUA Suing Itself?
NCUA claims that only it, and not the members of WesCorp, can decide what is in the best interest “of the federal credit union system.”
The credit unions assert that "appointing NCUA as plaintiff – after it was already appointed defendant – would render control of the claims “absurd and impracticable.” In other words, NCUA would be suing itself.
✅ NCUA At Fault?
Moreover, the credit unions claim that it was NCUA’s own oversight of WesCorp that contributed to the corporate’s failure, costing them all of their capital investments. “Throughout 2008 and into early 2009 the NCUA was particularly active in its oversight of WesCorp, having placed two examiners physically on-site at WesCorp to monitor its activities,” asserts the suit. “Yet, somehow, the NCUA oversaw WesCorp right into the ground, placing WesCorp into conservatorship on March 20, 2009.”
The federal regulator’s own role, say the credit unions, has created reluctance about pursuing claims in the case. Since it became WesCorp’s conservator – some 15 months ago – the NCUA has been “investigating the failure of WesCorp and whether any of its former officers or directors are legally culpable.”
“With representatives on the ground long before the conservatorship, and 15 months to investigate “the managers and boards who exercised such poor judgment,” the NCUA “still has not decided whether or not to initiate legal action against the former directors and former/and or current officers of WesCorp,” states the suit. “Despite its ambivalence as to whether or not it will pursue claims against the defendants, the NCUA has nonetheless intervened in this action.
✅ Inside Job?
“Now the NCUA – an entity that shares the blame for the failure of WesCorp – seeks to substitute itself as Plaintiff, and wrest this litigation out of the hands of the seven retail credit unions that have prosecuted it to date, even though the NCUA, as compromised as it is, has not determined whether it will pursue the action in their stead.”
Well, do you think NCUA "co-opted" the lawsuits? (Give you 3 guesses!)
corruption at it's finest... got to hand it to them they sure know how to play the system ... they must have watched the "Inside Job" too .....
ReplyDeleteMr Blaine, thank you for simplifying a complicated and convoluted situation at WesCorp and making it understandable to a "regular member".
ReplyDeleteI watched Inside Job and the picture I’m beginning to see is that SECU’s Board, the steward of almost 3 million members and $50 billion in assets was asleep at the wheel when it came to choosing a CEO to lead the organization. They depended on others to do their work for them and trusted others who may have had a vested interest in their choice like NCUA and headhunter Russell Reynolds. Whether they were lazy and wanted someone else to do their job for them or did not have the capability to do their job or had darker motives it really doesn't matter at this point. They are no longer qualified to lead the State Employees' Credit Union.
"This Board" meets Tuesday night. There is an agenda that should be followed. 1) "The Six" need to resign."The Six" demonstrated reckless disregard for the "culture of integrity" at NCSECU. Let the membership in October determine the course for SECU. 2) Get rid of Risk Based Lending(RBL) better known as "Kick 'em when they're down". 3) Rescind the new/new election process put in place to protect "This Board". What are you scared of? If the membership approves of your job, they will vote you back on. Why do you want to rig the election? Fire the firm, while you're at it. 4) Fire all those bank employees and put the "legacy" employees back in leadership. (By the way, That is badge of honor to be a legacy employee.) 5) Do construction loans by hand if you have too. members need them. 6) Get out of all securities... Members are conservative with their money. SECU should be too. 7) Get rid of all new/new. 8) Talk to employees!!!!!!!!! to find out how to proceed with the updating. Get out of the cloud! Stop handing over everything to outside contractors. NCSECU kept everything in house for a good reason. Talk to Mike Lord find out WHY?
ReplyDelete8) "THE SIX" resign. FAST! ASAP! DO NOT DELAY. That is the most important thing "this Board" can do.
Wednesday morning, the membership will know what direction "this Board" with Leigh Brady at the helm intends to take.
I am not an employee by the way. Just a furious member who watches her money and has followed this folly closely. Self imposed reckless destruction of an unusual, singular financial institution that was a beacon of hope for folks in NC that there could be financial security. Can NOT belief the recklessness with which "this Board" has acted--and hired a charlatan to boot! (Although it looks like he booted himself!)
Preach! If they have any smidge of conscience they SHOULD RESIGN!
DeleteIs that really what happened?? Was Hayes forced out ?
DeleteDoubt it. You don’t send a memo fully supporting someone who you are pushing out. You’d wait until the guy left and then post your propaganda. Never know for sure, but I’m confident that he got tired of being questioned and set up his exit.
DeleteSo why did they hire the search firm they hired? Not known for searching for CEOs of credit unions. Who vetted the search firm? Were other search forms vetted? Why did they chose a search firm without credit union expertise? Who did the due diligence on the candidates? Did any of the board members talk to other credit unions? Did they talk to employees and members, about NCSECU--or did the 11 just decide they were in charge and could do whatever they wanted with a 50 billion $$ operation? Or were they the same arrogant know-it-alls they have revealed themselves to be over the past 18 months? Did they have an agenda for the new CEO--other than no one from NCSECU? They thought someone who was an active participant in the largest loss in credit union history and who was CEO at a 250 employee organization could run NCSECU? (run it into the ground-- and fast with "this Board's" leadership(?).) Operating expenses skyrocketing, members moving assets because of horrible rates, gouging folks on loans. Branches suffering, bloated administration, RBL, shabby treatment of Latino, LGFCU. Sure next move will be to blame Jim Hayes, although the announcement was effusive in praise. Has "The Six" dug into their folly? And why didn't they make Leigh Brady interim? Looks like its plunging on with their reckless course. All will be revealed on Wednesday! Perhaps we will finally see some gumption from a couple of "this Board".
ReplyDeleteThere was plenty of in house executive managers who were both qualified and had EARNED their shot to run SECU. NONE of this would have happened. BTW this technology stuff they keep harping on is really a red herring. Everyone understands technology constantly needs updating. The new/new folks just had a different vision... I think part of it is to shuffle money around, who really knows where all the money ended up. Maybe if we can find out who benefitted from the millions they spend and did it "happen" to finds its way into the board's and c-suites pocket book? You know bonus' without actually calling it that.
ReplyDeleteBTW, all 11 BOD's approved of JH and said so in their most recent letter/memo ... don't cut the other 5 any slack, birds of a feather flock together. If they feel differently then say so ... I'll be paying attention ... because it's what you DO not what you say. Words are cheap and nobody is believing you now at this point. You been caught in too many questionable statements (down right lies)!
Maybe the bod is so dug in because they don’t want anyone to start digging around in the financials?
DeleteIncompetence thy name is ayers
DeleteYes the blame goes to the BOD but Hayes is the primary culprit. He should have taken the time ti understand culture and history . Then again the institutions that he worked in prior to SECU is defunct or in dire straits. Can’t wrap my mind why another institution chose him as CEO. The opportunities this man receives is mind boggling. You’d think he’s a Musk or Bezos of the credit union world.
ReplyDeleteincestuous relationship with NCUA, credit union regulator? He has a Teflon ability to wreck things and not be held accountable...
ReplyDeletedo we say "Inside Job" ....... possible .... ;)
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