A Tap on the Wrist

M.E.A. CU of Monticello, Illinois was cited and fined by the state regulator for improperly granting unsecured loans of $20,000 and $13,631.45 to two members, one of the members was on the credit union's board of directors.

According to Illinois Administrative Code the maximum unsecured loan for credit unions with between 0 and $500,000 in assets was $3,500.

When examiners discovered these regulatory violations during a March 28 exam, the state CU regulator gave the credit union until May 31, 2013 to cure the violations. The credit union manager informed the the state regulator that the two members would not comply with the remedial order.

The credit union supervisor then wrote the the credit union board member with the impermissible loan stating that the violation could result in a civil penalty for the credit union and her suspension or removal from the credit union's board. Rather than cure the violation, the person resigned from the board shortly after receiving the letter.

As a result, the credit union was fined a civil penalty of $100, which was nothing more than a tap on the wrist. The credit union could have received a fine up to $1,000.

Read the civil penalty notice.