NAFCU URGES NCUA TO USE
RESTRAINT IN BUDGET PROCESS
ALEXANDRIA, Va.-NAFCU called on NCUA to freeze the agency's budget and look for new opportunities to cut spending, after two years of big spending increases that increased the agency's budget by a whopping $45 million, or 27%.
In addition, NAFCU President Fred Becker, in a letter to all three NCUA Board members, expressed growing frustration with the agency's action over those two years eliminating public input into the agency's budgeting process. "From the outset when the agency decided to cease conducting budget hearings, I expressed my concern that our credit union members, who fund the agency, would not have the opportunity to weigh in on the agency's budget," said Becker. "Every dollar assessed begins with a dollar crossing a teller's window and when taken adversely impacts a credit union's ability to serve its members."
The NAFCU letter comes as NCUA is poised to approve a new budget for 2012, after a $22-million, or 12% increase in this year's spending, and a $23-million, or 13% increase in 2010 spending. The new spending has come to support increases in the agency's examiner staff, as well as to create several new departments, including an Office of the Chief Examiner, an Office of Consumer Affairs, an Office of Minority and Women Inclusion, and renovations to the agency's headquarters. This year's budget will also be affected by additional hiring for new staff to oversee the corporate credit union resolution. And even though NCUA agreed to freeze examiners' pay next year under a new union contract, benefits included in the pact are not expected to result in any cost savings.
"While NAFCU has not had the opportunity to review the agency's budget, we would question any budget that contained a sizeable increase over last year's budget," said Becker.
"NAFCU fully recognizes that the safety and soundness of credit unions is of utmost importance, but in this economic environment, we urge the agency to exercise fiscal restraint. I look forward to hearing from you at the earliest opportunity regarding this critical matter," Becker noted.
KINGPIN'S EX-WIFE TO TESTIFY
IN HUGE CU FRAUD CASE
CLEVELAND-The ex-wife of a reputed Macedonian crime kingpin charged in the massive fraud that sunk St. Paul Croatian FCU last year has agreed to testify against her husband and forfeit $850,000 in Macedonian bank accounts as part of a plea deal negotiated with federal prosecutors.
Under the deal, Rose Ann Nikolovski will plead guilty to two criminal counts in connection with the $70-million fraud and forfeit $851,000 in bank accounts she co-signed with her former husband Koljo Nikolovski in Komercijalna Banka and Capital Bank in Skopje, the capital of Macedonia, according to sources with the U.S. Attorneys Office. She will also forfeit a 2003 BWI valued at almost $13,000.
Koljo Nikolovski, who authorities say is head of an international crime syndicate based in Skopje, is jailed in Cleveland and awaiting charges he helped mastermind the huge fraud that sunk the one-time $240 million credit union. The Nikolovskis maintained dual residences in Macedonia and the Cleveland suburb of Eastlake, Ohio, where St. Paul Croatian FCU was based.
Prosecutors said Nikolovski and several family members and accomplices took out tens of millions of dollars in loans from the doomed credit union they never intended to repay by bribing the credit union's CEO, Anthony Raguz. Raguz pleaded guilty earlier this year to accepting more than $1 million in bribes to approve the ill-fated loans.
Koljo Nikolovski allegedly wired almost $6 million of loan proceeds to banks in Macedonia and Croatia. None of the funds have been recovered yet.
Also charged in the fraud are Nikolovski's nephew Marko Nikoli, and Rose Ann Nikolovski's brother John Cendol, Jr., along with more than a dozen other members of the ill-fated credit union.
The failure of St. Paul Croatian is projected to cost NCUA $170 million to resolve, making it the biggest CU fraud ever.
FANNIE MAE NEEDS ANOTHER
BAILOUT AFTER BIG Q3 LOSS
WASHINGTON-Mortgage giant Fannie Mae reported another big third quarter loss of $7.6 billion, which it said will necessitate additional taxpayer assistance of $7.8 billion.
The third quarter loss includes $2.5 billion in preferred stock dividends the company, which has been under federal control since September 2008, paid to the federal government.
The company's third-quarter loss was driven primarily by two factors: $4.9 billion in credit-related expenses, the substantial majority of which were related to its legacy (pre-2009) book of business; and $4.5 billion in fair value losses driven primarily by losses on risk management derivatives due to a significant decline in swap interest rates during the quarter. The decline in interest rates during the third quarter had a significant impact on the company's derivative losses.
Freddie Mac also recently posted a wider third-quarter loss as derivatives losses increased and the weak housing market weighed on results. The company also requested an additional $6 billion in federal aid, bringing the total amount of government aid it has requested to more than $70 billion since the financial crisis.
Fannie has received $112.6 billion so far from the Treasury Department-the most expensive bailout of a single company. Freddie Mac has drawn $72.2 billion in taxpayer bailout funds so far.
