WASHINGTON – CUNA’s new president and CEO Bill Cheney said yesterday he was disappointed in being named as defendant in a negligence suit NCUA is pursuing against directors of WesCorp FCU and denied culpability in the failure of the one-time $34 billion corporate, as he did earlier with the failure of U.S. Central FCU, where he also served as director.
“I am naturally disappointed that NCUA has chosen to pursue this action with regard to my service on the WesCorp board, which ended in February 2006,” said Cheney in a prepared stated released by CUNA. “I am confident my record of service will be made clear during the course of this legal process and I fully expect a positive outcome.”
Cheney, who served on the WesCorp board while he was CEO of Xerox FCU (now Xceed Financial FCU), was among 15 officers and directors named by NCUA in an amendment to a suit brought by seven credit union members of WesCorp, which NCUA has taken over as conservator of the failed corporate. Earlier, Cheney, who later served on the U.S. Central board representing the American Association of CU League Executives as president of the California CU League, was targeted in that corporate failure by NCUA, which said it is pursuing potential negligence claims against officers and directors of U.S. Central.
Cheney asserted his innocence in the WesCorp case, in which NCUA claims the board allowed management to put a staggering 95% of its investments in private label mortgage-backed securities, and 37% of it in risky subprime Option ARM securities. “My service was completed before most of the securities that caused losses were purchased,” he said. “The complaint addresses a period prior to my service with CUNA when I was a credit union CEO and served voluntarily on WesCorp board. I completed my board service in February 2006, before the securities that caused the majority of losses at WesCorp were purchased in a period when NCUA had an examiner on-site at WesCorp.”
The WesCorp suit threatens to open a rift among credit unions as it also names as defendants CEOs of several of the nation’s largest credit unions who were serving on the WesCorp board, including: Robert Harvey, the chairman of the board and CEO of Seattle Metropolitan CU; James Jordan, CEO of Schools Financial CU; Timothy Kramer, CEO of Keypoint CU; Robin Lentz, CEO of Cabrillo CU; John Merlo, CEO of Premier America CU; Gordon Dames, former CEO of Mountain America CU; Warren Nakumara, CEO of Honolulu FCU; Brian Osberg, CEO of Potelco United CU; David Rhamy, CEO of Silver State Schools CU; and, Sharon Updike, CEO of Eagle Community CU.
