On September 1, the NCUA's Office of the Inspector General (IG) issued two Material Loss Reviews on the failures of Certified FCU and Constitution Corporate FCU. The reports noted that both credit unions were under enforcement actions at the time of their failure.
The IG report on Certified FCU states that credit union was issued a Letter of Understanding after its June 2009 examination.
In a separate IG report, a Letter of Understanding and Agreement (LUA) was issued to Constitution Corporate FCU following its August 2008 examination. The consent order "contained several provisions pertaining to policies and strategies to address liquidity, credit concentration limits, and capital adequacy concerns."
However, these enforcement actions were never published. According to a footnote in the Certified FCU Material Loss Review, when an enforcement order is unpublished, the administrative remedy is considered an informal action.
I know that I sound like a broken record on this subject. But if NCUA believes that credit unions are owned and controlled by their members, then publish the enforcement actions. The members have a right to know.
I completely agree - enforcement actions are supposed to be public.
ReplyDeleteKeith,
ReplyDeleteI would think the reason for not publishing the enforcement action has to do with not wanting to alarm the public and create a "run" on the corporate which would make matters even worse. I also think you know full well that the FDIC takes a similar position with banks all the time.
Actually, all federal bank regulators publish their enforcement actions and have searchable databases.
ReplyDeleteWrong, in conjunction with the 2008 crisis and subsequent bailout, there have been a number of unpublished bank enforcement actions, government mandates and demands.
ReplyDeleteWow. That implies NCUA thinks the CU problem could be so bad that the public knew it would cause a run.
ReplyDelete