Wednesday, December 1, 2010

Recap of 10 Costly Credit Union Failures

NCUA's Inspector General (IG) issued a report summarizing significant findings associated with 10 costly natural person credit union failures between November 2008 and October 2010. The report notes that (1) poor strategic planning and decision making; (2) inadequate policies and internal controls; and (3) fraud contributed to these failures.

The following table lists areas of concern that were common with each failure (click on table to enlarge).












Appendix B lists various recommendations to NCUA management to address concerns identified by the IG report and managements comments regarding these recommendations.

For example, to address concentration risk, the IG recommends that credit unions provide more information on their call report breaking out unfunded commitments by loan type. NCUA management agreed with the recommendation and will add two additional categories of unfunded commitments not currently captured on the 5300 Call Report: indirect and third-party loans.
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