The NCUA filed suit in Los Angeles Superior Court Dec. 30 to replace seven natural person credit unions as plaintiffs in a negligence suit against current and former employees and volunteers of failed Western Corporate Federal Credit Union.
The NCUA said in a statement that, as conservator, it holds "all the rights titles, powers and privileges of the credit union and any of its members, accountholders, officers or directors."
"Federal law provides that NCUA, as conservator, is the appropriate party to represent the interests of all members in connection with any recovery attempts," said NCUA General Counsel Bob Fenner. "Claims of this nature belong to all of WesCorp's members, not just the first plaintiffs to arrive at the courthouse."
Original plaintiff Stuart Perlitsh, President/CEO of the $343 million Glendale Area Schools Federal Credit Union, criticized the move, saying his group filed suit because the NCUA failed to take appropriate legal action.
And, because the NCUA employed a full-time examiner at WesCorp, and should take some responsibility for the losses, Perlitsh said he's "not very optimistic" the regulator will handle the suit to his satisfaction.
"The NCUA could not have found the court house with a Seeing Eye dog had we not led them to it," he said.