NCUA Seeks New Powers To Collect From Officers, Directors At Failed CUs

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WASHINGTON – NCUA called on Congress today for extraordinary new powers that would extend the statute of limitations on charging officers and directors of failed credit unions to as long as 10 years.

The request, made by NCUA Chairman Debbie Matz during a hearing before the Senate Banking Committee, comes as some officers and directors of WesCorp FCU are challenging a civil suit brought by NCUA over their responsibilities for the failure of the one-time $34 billion corporate, claiming the current statute of limitations excludes the NCUA charges.

NCUA proposed authority to pursue any alleged violation of law brought against any official of a credit union or third party involved in the affairs of the credit union going back ten years prior to the failure of NCUA conservatorship.

The extension of the statute would allow NCUA greater powers to file claims against officers and directors of failed credit unions, Matz said. “This would provide parity with similar authority already provided to FDIC, clarify other ambiguities in the statute, and allow the NCUSIF to better mitigate losses.”

Matz told the Senate panel that the total cost of the corporate credit union bailout is currently estimated at $15.2 billion, with credit unions already having paid about $7 billion, meaning they will pay another $7 billion to $9 billion over the next ten years. “It is important to note,” Matz said, “that all of this is being borne by the credit union industry and not taxpayers.”

NCUA also plans to ask Congress again for additional powers to examine the books of all private-sector third-party credit union vendors, including CUSOs, a power that other federal regulators already have.

“Credit unions,” said Matz. “are increasingly relying on third-party vendors to support technology-related functions such as internet banking, transaction processing, and funds transfers. Vendors are also providing important loan underwriting and management services for credit unions. The third-party arrangements present risks such as threats to credit risk, security of systems, availability and integrity of systems, and confidentiality of information. Without vendor examination authority, NCUA has limited authority to minimize risks presented by vendors.”

Matz also renew requests to allow credit unions to raise alternative capital and to count it as net worth, and to raise the maximum allowable limits on member business loans from 12.25% of assets.

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