'Abysmal Performance' Unforgivable
IRONDALE, Ala.-The failure of, and ongoing losses by, many of the corporate credit unions can be attributed to arrogance on the part of CEOs and boards from some of the biggest corporates, which played a role in the high concentrations in securities that contained risk, asserts Thomas Bonds.
The CEO of Corporate America CU also told Credit Union Journal that a great deal is still to be learned about the actions of some of the biggest players in this mess.
"This story is not over by a long way. There is more here to be learned about the actions of all parties that have had anything to do with this crisis," Bonds said.
Bonds, whose corporate has filed a federal lawsuit against the board of directors of U.S. Central FCU and its accounting firm (CU Journal, July 12), said he has learned a great deal about the corporate crisis during the discovery phase of the suit, but declined further comment.
While not wishing to comment on what's been learned during discovery, the CEO is clear about what led to the crisis. "By and large, many corporate credit union management teams were derelict in their duties by placing so much reliance on either products that contained credit risk or an institution, U.S. Central, that contained credit risk... The absolute abysmal performance of the larger corporates-some conserved and some not yet conserved-is unforgivable."
Fortunately, Bonds noted, Corporate America did not have concentrations in U.S. Central nor in investments that contained credit risk. The $2-billion institution is one of a very select few institutions that sustained no capital impairment despite the heavy losses seen system-wide.
The blame game points fingers at three levels of corporate players, asserted Bonds. The "great big boys" who did a lot of damage, the relatively smaller pass-throughs that were simply relying on U.S. Central's investment skills, and then mid-sized corporates that were "playing a little bit in both arenas. But 95% of the blame is on the CEOs and boards of large corporate credit unions," said Bonds. "It's the guys sitting around the board table, the guys sitting in the corner offices. They did this. And they did it through sheer incompetence and arrogance."