Reign of Error...

Can You See Through This?

In the lawsuits NCUA has filed against Corporate boards and managers, there is an active use by the Agency of  "20/20 rear-view mirror" foresight.  As the NCUA's own Office of the Inspector General (OIG is NCUA's "internal auditor") reports in the Members United post-mortem (OIG-11-01, 5/4/2011), the Agency's assessment of the Corporate "was similar to Member's United management..."


Some interesting NCUA CAMEL ratings of Members United ( from page 27 of the OIG report):
                                     CAMEL                    CAMEL            CAMEL
Date           Composite Rating    Board Oversight     Liquidity Risk

12/12/05              2                                 2                     1  (!)
12/07/06              2                                 2                     1  (!!)
12/06/07              2                                 1                     1  (!!!) 

...ultimately what raised the solvency concern for both Members United and the NCUSIF was a lack of liquidity  ... it is quite apparent that NCUA didn't see in its rear-view mirror what lay just ahead.  As late as 2008, NCUA rated both Member United's board and liquidity as "Superior".

NCUA could choose fair disclosure and full transparency by releasing the CAMEL ratings of the other four federally-chartered defunct, conserved Corporates (failed at a cost to you of $15 + billion!)  so we all can evaluate NCUA's effectiveness as a regulator  - or is this release of a CAMEL code by the OIG another violation of its "own law" by NCUA?


One might, given all this, expect at least a small "mea culpa" from Big Blue, but.....


Don't hold your breath!  Because....
                                                     

The "C" in CAMEL apparently now stands for "CYA" at the Agency....  and the NCUA is "unofficially" a code "5" on that one...with a  most definitively "negative" outlook.