NCUA's Inspector General stated that it will perform a Material Loss Review on Beehive Credit Union. The Inspector General in its 2011 Annual Performance Plan stated that the loss to the NCUSIF from this soon-to-be closed credit union will exceed $25 million.
What is odd is that while NCUA's Inspector General has announced that it preparing to look into the causes of this credit union's failure, neither the Utah credit union regulator nor the NCUA have bothered to seize this credit union.
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In 2007, Beehive initiated a conversion to a mutual savings bank. After a large scale push to convince their members that it was in their best interest to have more branch flexibility and greater ability to make more and larger business loans, the conversion was ratified by a 53-47 vote. In 2009, the application was withdrawn due to declining economic conditions. I will be very interested to see how this withdrawn conversion attempt affected the strength of the CU, and what role the OIG finds that it played in their failure. I'd also like to see if management's focus was influenced by greed during the very long conversion process.
ReplyDeleteAnonymous -- you are stretching for meaning perhaps in hopes it discourages CUs from considering the only escape they have from assessments--charter change. the charter change did not underwrite bad loans. bad underwriting led to bad loans. also, if you are as studied on the beehive charter change process as you say, then you know that raising capital was not in their business plan. what you should ask yourself is "why isnt capital raise in everyone's business plan?" apparently plenty of cu's want access to alternative capital, judging by the press reports and ncua's white paper on alternative capital. cuna just cant deliver secondary capital for some reason. wonder why.
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