NEW LONDON, Conn. - State Attorney General Richard Blumenthal last week called on NCUA to disclose more information about the prior week’s closure of New London Security FCU, hours before its investment advisor plunged to his death in an apparent suicide.
Blumenthal said he wants NCUA to provide more assurances to depositors that they will be investigating the 72-year-old credit union’s failure, aiming at full restitution for those who have lost money.
The $12.7-million credit union was seized by NCUA with more than $700,000 of uninsured deposits.
In addition, the credit union had only $234,000 in loans outstanding in more than 98% of its assets in investments–more than $5 million worth which is unaccounted for on quarterly call reports.
The authorities are probing what the nature of those investments were, after last week’s suicide by the credit union’s 82-year-old investment advisor, Edwin Rachlef, a broker with A.G. Edwards.
Rachlef jumped from a window on the top floor of an 11-story apartment building for seniors in New London around 6:30 pm Monday, hours after NCUA announced it was seizing the credit union.
Some observers suggested the unaccounted for investments were underwater mortgage backed securities, but authorities would not confirm that.
The seizure was puzzling because even though NCUA said the credit union is insolvent, New London Security has more than $2.1 million in capital, a net worth ratio of almost 17%, and reported a small loss of just $5,000 for the first six months of the year.
A representative of the Attorney General confirmed their interest in the case and that they had contacted NCUA.
“Although I understand that some information may be sensitive and confidential, my experience is the lack of any information from a regulator breeds frustration, mistrust and fear,” said Blumenthal in a letter to Mark Treichel, regional director for the NCUA. “Appropriate information can be provided to the victims of this unfortunate situation without jeopardizing investigative efforts.” (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com
