Monday, March 12, 2012

Covering Up Fraud?

The problems just keep surfacing from the April 2010 collapse and conservatorship of St. Paul Croatian Federal Credit Union, which created an $175 million NCUSIF loss - the largest (non-Corporate!) loss in NCUA history.

Management fraud is the latest problem. No, not fraud by St. Croatian's old management, who were clearly guilty and have 'fessed up!  It's the new management - the NCUA - which is accused, by a church no less, of acting inappropriately (imagine that!)

Seems Holy Love Ministry Church claims two things: 1) the Church (which is out $1.5 million or so) was prohibited from legally withdrawing funds prior to the conservatorship by an NCUA officer and 2) NCUA officers had instructed CU staff to make calls to credit union members to help them restructure existing accounts to maximize deposit insurance coverage to avoid potential loss.

Probably just some normal whining, sour grapes - right? Apparently not, since according to the Church's lawyer (see CUTimes - 2/26/2012) the delayed withdrawal and calls to maximize coverage are well-documented in the administrative record of the conservatorship.  If the NCUA did help manipulate accounts in advance, three other questions immediately arise: 1) Did NCUA call every "eligible" member over the $250K limit? ( The Church apparently thinks not.); 2) Is this the same procedure NCUA uses in all conservatorships? (Or is "standard practice" something a bit more arbitrary and capricious.); and 3) If NCUA is manipulating accounts at conserved CUs to avoid member losses, who then is absorbing those losses? (Think real closely on that one and it'll come to you - in more ways than one!)

The Church simply wants to do "a little discovery" which is Latin for "to ask some really embarrassing questions under oath."  NCUA, according to the CUTimes "has resisted having to provide documents or have staff deposed on the grounds that the Administrative Procedures Act does not generally allow for discovery in judicial review cases."

Well, that was about the same message CUs in North Carolina received in response to requests for NCUA to visit and explain its actions against NC credit unions and was precisely the same message that NCUA delivered under oath to Congress (House Financial Services Committee on HR-3461 on 2/1/2012) concerning the need to document exam findings....

We don't have time to be bothered with the Truth... 

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