Monday, July 20, 2009

Why Is WesCorp Still Open?

Four months ago on March 20, the National Credit Union Administration placed Western Corporate (WesCorp) FCU into conservatorship.

WesCorp is insolvent. Its 2008 Annual Report showed an operating loss of almost $7.6 billion and a capital position of negative $5.8 billion.

However, NCUA is providing special assistance to keep the credit union up and running.

WesCorp’s auditors wrote that the corporate credit union “is dependent upon the continued support and forbearance of the NCUA” and had received assurances from NCUA that it would provide appropriate financial resources and assistance to continue normal operations at WesCorp and no actions will be taken to disrupt core services and operations for a minimum of one year from the date of auditors’ opinion.

As a result, WesCorp is able to provide uninterrupted service to its 1,000 plus credit union members, including the payment of dividends on regular shares (i.e., share, share draft and share certificate accounts).

Instead of conservatorship, NCUA needs to put WesCorp into receivership and WesCorp’s member credit unions should be required to make alternative arrangements for services they are currently receiving from this zombie corporate credit union.

After all, WesCorp is not the only game in town.
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