WesCorp Suit Poses Legal Jeopardy For CUNAs Cheney
WASHINGTON – Credit union executives and directors are wondering whether new CUNA President Bill Cheney will be restricted in lobbying NCUA because of the lawsuit the agency has brought over Cheney’s tenure on the board of WesCorp FCU.
“There’s got to be some kind of prohibition on him meeting with NCUA because of his position in the suit. He was a named defendant,” said Michael Kos, a lawyer and chairman of Chicago’s SelfReliance Ukrainian American FCU, which disaffiliated from CUNA last year over CUNA’s role in the corporate meltdown. Kos was among 375 executives and directors meeting here for NAFCU’s annual Congressional Caucus.
Cheney and 14 directors and officers of WesCorp were named two weeks ago as defendants by NCUA in a civil suit alleging negligence and fraud in connection with the failure of the one-time $34 billion corporate. Cheney, who also served on the board of U.S. Central, was cited by NCUA in a notice of potential claim in the failure of that institution.
CUNA insisted that Cheney’s legal status in the WesCorp case will not prevent him from meeting with top NCUA officials. It cited the fact that NCUA is suing the WesCorp officers as conservator of the credit union, and not as a direct party. In fact, Cheney met with all three NCUA Board members last Thursday when the Board approved an assessment for the National CU Share Insurance Fund.
NCUA also said that agency officials are not limited in meeting with Cheney by their pending suit.
But more jeopardy lies down the road in both cases for Cheney, as NCUA typically follows up civil suits with civil administrative charges against the defendants in such cases. Those cases usually result in an order barring the individual from working for a federally insured credit union, so it is not clear how that would affect Cheney. In any case, such charges would be extremely embarrassing to CUNA and Cheney, who was hired in July to succeed Dan Mica as president and CEO.
Some of the credit union executives and directors want answers from Cheney and CUNA on what CUNA’s role was in the failure of the corporates, as CUNA controlled two of the seven seats on the U.S. Central Board. Cheney was serving on the WesCorp board until 2006 as a representative of and president of Xerox FCU (now Xceed Financial CU), and later served on the U.S. Central Board representing the leagues as president of the California CU League.
“We were blind-sided when this all first happened,” said Bohdan Watral, the outspoken president of SelfReliance Ukrainian. “People at NCUA, people at the corporates and people at CUNA deflected it all, saying ‘everything is all right.’ All of a sudden they tell us that the corporates are going to have to be bailed out and we have to pay $5 billion.”