Deal Could Save CEO Jobs For One-Time WesCorp Directors
LOS ANGELES – Lawyers representing eight current CEOs of the nation’s biggest credit unions are currently negotiating with NCUA to settle claims related to their service on the board of WesCorp FCU that would allow them to continue operating their credit unions, according to sources involved in the talks.
The eight CEOs are among 16 executives and directors sued by NCUA over the failure of the one-time $34 billion corporate credit union, estimated to cost credit unions as much as $7 billion to resolve.
The proposed settlements would allow the CEOs to concede their roles in the WesCorp failure but continue to serve their credit unions, something that could be prohibited if NCUA were to bring formal administrative charges against them, according to the sources. The sources emphasized that no agreements have been reached and the settlement talks could collapse.
The only precedent for such an agreement is after the 1995 failure of Capital Corporate FCU, previously the biggest corporate failure, under which NCUA let off directors and supervisory committee members, many of them CEOs of Washington area credit unions, with “Letters of Reprimand.” Two individuals, including CapCorp CEO Clay Brooke, were served with more serious cease and desist orders.
NCUA declined to comment. Lawyers representing the CEOs did not respond to phone calls seeking comment.
In its civil suit, NCUA has charged the WesCorp officers and directors with breach of fiduciary duties and gross negligence in the failure of the corporate giant, which precipitated NCUA’s corporate bailout. NCUA typically follows such civil suits by moving to bar individuals in the suits from working for any federally insured credit union or bank. Such a move in the WesCorp case would effectively end the careers of several top credit union executives.
Named as defendants in the NCUA’s suit are former directors: 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; Sharon Updike, CEO of Eagle Community CU; and, Bill Cheney, former CEO of Xerox FCU [now Xceed Financial FCU]. Several of the CEOs, including Harvey and Dames, have retired, and Cheney currently is CEO of CUNA.
Also being sued by NCUA are: Robert Siravo, former CEO of WesCorp, Todd Lane its CFO, Thomas Swedberg, head of human resources, Robert Burrell, former executive vice president and chief investment officer; and Timothy Sidley, former chief risk officer.