LOS ANGELES – Two former executives have agreed to settle civil negligence claims with NCUA, leaving charges pending against three representatives of the one-time $32-billion corporate credit union.
But it’s not clear what NCUA hopes to accomplish in pursuing its claims against the WesCorp figures, including former CEO Bob Siravo and former chief financial officer Todd Lane, because there is no insurance coverage for the one-time executives, leaving little but the individuals’ personal assets for NCUA to recover in a civil trial.
Among those settling the NCUA charges are Timothy Sidley, the former chief risk officer for the corporate giant, who has agreed to testify in the continuing case. “The parties have reached a settlement,” Seth Freilich, Sidley’s attorney, told Credit Union Journal Friday, adding that the terms of the agreement are confidential. “I expect the court to issue an order approving the settlement.”
The other figure to settle has not yet been revealed, but is expected to be made public over the next few days.
“I think it’s curious that NCUA settled the case with the one guy [Sidley] who managed the risks,” said Kenneth Fitzgerald, who is the lawyer for Lane. “That was Sidley’s sole responsibility.”
The WesCorp executives were charged by NCUA in its suit with gross negligence for loading up the corporate with risky mortgage backed securities that made up the vast majority of its huge $30 billion investments portfolio prior to its spectacular 2009 collapse. The failure of WesCorp is projected by NCUA to cost the credit union system $7 billion to resolve.
NCUA originally filed suit against the executives and 11 WesCorp directors, but the federal court dismissed the claims against the directors, who it said could not be blamed for exercising poor judgment in following the advice of the managers.
