WesCorp Execs, NCUA Blamed for Debacle
WesCorp's management didn't manage risk well and invested too heavily in residential mortgage-backed securities, while NCUA examiners failed to "adequately and aggressively," address the risks.
That's the finding of the material-loss review conducted by the NCUA Office of Inspector General. The NCUA placed WesCorp into conservatorship in March 2009. The loss to the Temporary Corporate Credit Union Stabilization Fund is estimated to be about $5.59 billion.
As of December 2008, 60% of WesCorps's $22.7 billion RMBS portfolio was made up of subprime and alt-A mortgages "underwritten with risky loan terms and characteristics," according to the report.
In September, the NCUA issued a rule on corporate credit unions that strengthened regulations, including instituting strict limits on risk concentration.