All six Credit Unions outsourced their management, recordkeeping, and maintenance of financial records to a third party provider, Service Center for Credit Unions, Inc. (SCCU), in Bensalem, Pennsylvania.
NCUA liquidated all six credit unions on April 5, 2016. The failure of the six credit unions resulted in an estimated loss of $3.2 million to the National Credit Union Share Insurance Fund (NCUSIF).
The MLR reported that the six credit unions failed due to overstatement of approximately $3.2 million in assets, primarily investments in certificates of deposit (CDs).
The MLR cited three reasons for the failure of these six credit unions:
- Management displayed a lack of integrity and did not manage the six credit unions in the best interest of their members;
- The Supervisory Committees failed to obtain Supervisory Committee Audits that included confirmation of investments; and
- The Boards of these six credit unions exercised weak oversight.
Read the Material Loss Review.
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