Sprinting for the finish....
FROM THE AMERICAN BANKER NEWSPAPER
NCUA Wrestles CUs Over WesCorp Claims
✅ July 05, 2010, 2:55 p.m.
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!)
