NCUA OFFICIALLY CLOSES
INTERNET GAMBLING CU
MESA, Ariz.-NCUA last week closed Vensure FCU, the credit union supported by Internet poker gambling that had been under federal conservatorship since April 15.
It was the second credit union failure of the week, following the closure of $7-million Borinquen FCU of Philadelphia the Friday before, and 12th failure of the year. Borinquen was chartered in 1974 to serve low-income communities in Philadelphia.
NCUA's closure of Vensure came a week after authorities closed down Full Tilt Poker, one of the two online poker sites for which the $5-million credit union processed bets.
NCUA took Vensure under conservatorship April 15, hours after the U.S. Justice Department indicted a dozen international Internet gambling figures and froze $3 billion in 32 bank and credit union accounts, including $2 million at Vensure that was used to process bets at Full Tilt Poker and PokerStars.
In taking over the credit union, NCUA said it had no loans and its only business was processing of Internet bets in violation of the Unlawful Internet Gambling Enforcement Act.
NCUA said it made the decision to close Vensure FCU after determining the credit union was insolvent and has no prospects for restoring viable operations. At the time of liquidation the credit union served 140 members.
Vensure is in the middle of an international probe of illegal Internet gambling and was seized in April, even as it reported strong earnings, all from its online betting business.
HOUSE GOP IS CHIPPING
AWAY AT FANNIE, FREDDIE
WASHINGTON-In a move widely seen as political gamesmanship, the Republican-controlled House Financial Services Subcommittee on Government Sponsored Enterprises continued last week to pass bills aimed at phasing out Fannie Mae and Freddie Mac, even though the legislation is widely seen as destined to fail in the Senate.
The panel, which endorsed five such bills earlier this year, added seven last week and is planning on as many as 12 more before the end of the year. The bills are aimed at eliminating government backing for the two secondary mortgage market giants, which have been under government conservatorship since September 2008, and privatizing their functions.
The credit union lobby is opposed to the move because it sees the government backing of the secondary market, both in buying their mortgages and guaranteeing securitized loans, as critical to evening the competition with giants that dominate the vast majority of the mortgage market.
The move by GOP lawmakers is seen as gamesmanship because it's widely believed in Congress that any plan to resolve the Fannie and Freddie debacle-the failure of the two GSEs has cost taxpayers an estimated $150 billion to date with no end in sight-will require a comprehensive, not piecemeal, approach. The Senate, which is controlled by Democrats, has indicated it won't undertake such an effort until at least next year.
Last week's bills would: cap government assistance in the Fannie and Freddie bailout; limit the amount of legal fees the government will pay to defend Fannie and Freddie figures in civil litigation; eliminate funds the two companies set aside for low-income housing assistance; limit the size of the companies' business; and revoke their government sponsored charters.
CU CONVERSION PIONEER
MARIO INCOLLINGO PASSES
FEASTERVILLE, Penn.-Mario Incollingo, who lead the first credit union conversion to stock-owned bank, then swiftly sold the institution in a lucrative deal for insiders, passed away last week at 72. The cause of death was cancer.
Incollingo was CEO of IGA FCU, which he converted to a mutual savings bank in 1998, then made it the first credit union to go public just five months later.
He sold the ex-credit union to nearby First Penn Bank the following year in a deal that made millions for him and other insiders. A subsequent lawsuit over the First Penn deal showed that Incollingo actually began merger negotiations with First Penn in February 1999, just two months after the conversion to mutual savings bank for the former $200-million credit union, and 18 months before the IPO.
Long-time credit union members were mostly left out of the money when IGA became the first ex-credit union to sell stock, before being sold to First Penn, with public records showing that only 1,125 depositors took part in the 1999 initial public offering.
The route of IGA FCU, once the credit union for local electric company employees, has become a model for several subsequent conversions to banks.
Incollingo, a former executive at Glenside Savings & Loan, became vice president of IGA FCU in 1988, and from 1992 through 1998 he was its president, chief executive officer, and director.
When the converted credit union was acquired by First Penn Bank in 2001, Incollingo became chief operating officer and director before retiring in 2003.
Incollingo retired with 57,558 shares in the bank valued at $765,000 and a severance package that paid him $320,000, the proceeds of a company-paid life insurance policy, 10,000 stock options valued at $50,000, as well as the Mercedes Benz the company had been leasing for him.
He came out of retirement in February 2007 to serve as president of Colonial American Bank, located in Horsham, Penn., through October 2008.