The NCUA rated the District Government Employees FCU, theinstitution run by NCUA Board nominee Carla Decker, a CAMEL 3and criticized it for having a “high strategic risk.''

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Its “current infrastructure is not sustainable'' and itsoperating expenses are too high, according to copies of theexamination report obtained by Credit Union Times.

The report on the credit union's examination of last Decemberfound shortcomings such as: No foreclosure procedures; inadequatereporting to the credit union's board on information security, andwillingness by management to assume an unacceptable level ofinterest rate risk.

The credit union's overall CAMEL rating was a 3. Its otherratings were: 1 for capital, 3 for asset quality, 3 for management,4 for earnings, and 2 for asset liability management.

Decker did not return two phone calls seeking comment on Monday.Sources said the Senate Banking Committee planned to hold aconfirmation hearing on Nov. 17.

Decker's 10,800-member $45 million CU, which is based inWashington, D.C., reported a profit of $31,167 in the first sixmonths of 2011. That follows losses of $119,797 for 2007, $369,282for 2008, $483,946 for 2009, and $322,790 for 2010.

Last December, the NCUA and the credit union signed a letter ofunderstanding and agreement setting certain goals for return onaverage assets for 2011 and mandating certain reductions inoperating expenses and other management and financial changes.

The document also required the credit union's board to sendmonthly progress reports to the NCUA which include board minutes,monthly financial statements, a summary of delinquent loans bycategory, and the methodology sheet for calculating allowance forloan and lease losses.

The credit union exceeded the targeted return on average assetsfor the first three quarters of 2011.

The NCUA and credit union also signed a document of resolutionrequiring the implementation of an expense reduction plan andmonitor the progress of the plan.

Decker was nominated to the NCUA Board by President Obama last monthto succeed Gigi Hyland.