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May 04, 2010

Another LUA; Region III Changes

Posted by Anthony Demangone

NCUA has issued another LUA, this time against a $180 million-asset Massachusetts credit union.  What were the issues?
  • Insider abuse and self dealing;
  • Poor loan quality; 
  • Inadequate internal controls; and  
  • Weak management. 
 A few thoughts.
  1. NCUA appears to be turning the screws a bit more when it comes to supervising credit unions that it thinks are a threat to the share insurance fund.  This new heightened focus is something to take into account. 
  2. I've heard it said that NCUA rarely issues civil money penalties.  This is true, but take a look at the LUA and look at the action items and deadlines.  The affected credit union has to hire a number of consultants and do a ton of work within 30, 60, or 90 days, depending on the issue.  Sure, there's no civil money penalty.  But if you think this credit union will not be writing checks to third parties and working their fingers to the bone in the coming months, you'd be mistaken.  
***
Region III has a new acting Regional Director.  That would be Herb Yolles.    Former Regional Director Alonzo Swann is moving to NCUA headquarters.  Who does this affect?   Region III covers Alabama, Florida, Georgia, Indiana, Kentucky, Mississippi, North Carolina, Ohio, Puerto Rico, South Carolina, Tennessee, and the U.S. Virgin Islands.  (By the way, if any credit unions need compliance training in the U.S. Virgin Islands, please let me know.)  

Why do I mention this?  Many NCUA regulations require waiver requests or other compliance-related filings to first go to the Regional Director.   When it comes to people, God does not use a photo-copier.  Each person, including an NCUA Regional Director, will view a given situation differently.  So, it would make sense for credit unions in Region III to note the change at the top and to see who eventually fills the slot on a permanent basis.   On a related note, I'd take advantage of every opportunity to meet my Regional Director and his or her team. Relationships go a long way.   As does good relief pitching. But that's a topic for another day.

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