LOS ANGELES – The former chief financial officer of WesCorp FCU, being sued by NCUA for his role in the failure of the one-time $34 billion corporate credit union, has filed a counterclaim against the credit union regulator seeking more than $100,000 in legal fees he has incurred since the onset of the legal battle.
Todd Lane says that NCUA so closely monitored his activities and those of the entire WesCorp staff – it had an on-site examiner at WesCorp on a full-time basis – that NCUA bears as much responsibility for the failure of the corporate giant, which is projected to cost credit unions as much as $7 billion.
NCUA’s role at WesCorp, said Lane, CFO from 1998 to April 2008, was so extensive that its on-site examiner analyzed and assessed WesCorp’s investment strategies and risk assessment and helped evaluate the corporate’s asset and liability issues.
“As a result of NCUA’s constant oversight and examination efforts, NCUA was, upon information and belief, at all times aware of WesCorp’s monitoring and risk-prevention efforts and, upon further information, consistently approved of WesCorp’s efforts,” said Lane, now CFO at California Coast CU.
In fact, NCUA, asserted Lane, approved of WesCorp’s investments in risky Option ARM mortgage-backed securities, which eventually caused billions of dollars in losses. “Prior to its involvement in this lawsuit, NCUA never made any claims that WesCorp’s investment strategies violated NCUA regulations or WesCorp policies.” NCUA’s Office of Corporate CUs also never raised any objections to WesCorp’s investments, he claims.
NCUA’s suit against Lane and other senior officers of WesCorp, including CEO Bob Siravo and Bob Burrell, chief investment officer and Timothy Sidley, chief risk officer, claims gross negligence and breach of fiduciary in allowing WesCorp to load up on risky mortgage-backed securities – that at one time amounted to 70% of its investments – before its monumental collapse in March 2009. Similar claims against 11 WesCorp directors were dismissed by the federal court here last month.
Lane said his legal fees in connection with the NCUA suit should be covered by an indemnification policy WesCorp had with all officers and employees with CUMIS Insurance but that NCUA, as liquidating agent for WesCorp, has refused to reimburse him for legal fees. CUMIS, said Lane, has asserted that claims against Lane in this suit are excluded from coverage under the policy.
