JUDGE SAYS NCUA NOT ON
TRIAL IN WESCORP SUIT
LOS ANGELES-A federal judge ruled NCUA's oversight of WesCorp FCU is not on trial in the civil suit the federal regulator brought against executives of the failed one-time $34-billion corporate credit union.
In a nuanced ruling delivered after the hearing in U.S. District Court for the Central District of California, Judge George Wu said the WesCorp figures may not raise the issue of NCUA's oversight of the giant corporate, except when the issue of what NCUA knew and approved of prior to the March 2009 NCUA conservatorship of WesCorp. However, NCUA's pre-conservatorship actions, including its five-day-a-week, on-site examiner and regular waivers of its own investment regulations to allow WesCorp to buy risky securities, will not be admissible as a line of questioning in the case, Judge Wu ruled.
In fact, ruled Judge Wu, the WesCorp figures have conceded that NCUA cannot be held liable for its pre-conservatorship conduct. "Therefore, the affirmative defenses that are based upon the NCUA's [pre-conservatorship] conduct should be stricken," wrote the judge.
The WesCorp figures-CEO Bob Siravo, CFO Todd Lane, Chief Investment Officer Bob Burrell, Chief Risk Officer Timothy Sidley and Human Resources Director Thomas Swedberg-claim that NCUA's Office of Corporate CUs and its on-site examiner knew all along of their plans and investment practices, so they should not be found guilty of gross negligence in the huge corporate failure, as NCUA alleges in its suit. The WesCorp figures claim that NCUA's actions before the 2009 takeover are relevant to their defense because they were acting "with the go-ahead from" NCUA.
The judge said NCUA's action are not on trial, but can be used to determine whether the WesCorp executives were actually negligent.
Judge Wu also said the question of whether or not NCUA's 2010 suit came after the expiration of the relevant statute of limitations will be determined at a later date.
The judge also set another hearing for Feb. 6 on the claims by the WesCorp figures that a CUMIS directors and officers liability bond requires WesCorp (now NCUA as liquidating agent) to pay their legal fees and indemnify them against civil clams such as the suit brought by NCUA.
FLORIDA LAWMAKERS REJECT
MUNICIPAL DEPOSITS FOR CUS
TALLAHASSEE, Fla.-Florida's State House Insurance and Banking Subcommittee narrowly voted down a bill that would have allowed credit unions to accept public deposits.
The bill would have allowed qualified public depositories to include credit unions, thus allowing municipalities a choice of where to do business.
Banks argued that credit unions should not serve local government because they asserted credit unions "don't pay taxes."
NCUA CLEARS 4 MERGERS
INVOLVING LARGER CUS
ALEXANDRIA, Va.-NCUA approved four more mergers for billion-dollar-plus credit unions, as credit unions giants ended the year as they began it-acquiring their smaller brethren.
Approved in the closing days of 2011 were: Georgia's Own CU's acquisition of The Thrift FCU in Atlanta; Anheuser-Busch Employees FCU's merger of St. Louis Carpenter's FCU; and two deals for Wisconsin's $1.7-billion Landmark CU, allowing it to acquire Peoples CU and Horizon CU.
Several ailing credit unions are being merged out, including: Access First FCU, a $27-million Mattawan, Mich., credit union being acquired by United Bay Community FCU in Bay, Mich.; Peach State FCU, a $15-million credit union in Avondale Estate, Ga., being merged into Gwinnett FCU; and, Kunia FCU, a $16-million Hawaii credit union being acquired by Matanasuka FCU in Alaska.
NCUA approved 37 mergers in December making a total of 234 mergers during 2011, up from 179 mergers in 2010.
3 CREDIT UNIONS FLEE
FEDERAL CHARTER AT YEAR END
ALEXANDRIA, Va.-NCUA reported it approved three more conversions from federal to state charters in December, making nine for the year.
December's charter switchers were: Denver Community FCU with $220 million in assets; DOCO Regional FCU, a $175-million credit union in Albany, Ga.; and Fort Gordon FCU, a $56-million Fort Gordon, Ga., credit union.
Four state credit unions switched to federal charters in 2011. The biggest charter flip of the year was by NavyArmy Federal Credit Union, a $1.2-billion Corpus Christi, Texas credit union that converted to a state charter, enabling it to branch out from its traditional military base to a community charter.
