SAN DIEGO -- So far, the credit unions that have failed as a result of the economic downturn have had relatively few assets; however, the NCUA told San Diego Town Hall attendees today that will change next year.
Board chair Debbie Matz said she's "very concerned" about the losses credit unions are expected to suffer in 2010, particularly those that stem from "inordinate portfolio risk" in business and indirect lending.
In attempt to shore up losses, NCUA examiners will check 5300 reports for "red flags", like an usually high percentage of repossessed vehicles compared to auto loans, particularly if the credit union participates in indirect lending. Suspicious credit unions will receive a visit or call from an examiner in addition to the institution's regular exam.
"Even if you're well capitalized, if you're doing these other things, you'll get a visit from your examiner," Matz said. "We've seen cases of credit unions going from well capitalized to shuttered within one year, and that can't continue."
