Telesis Failure Blamed on Management, Board, Regulators
The NCUA’s Inspector General blamed Telesis Community Credit Union’s former management and board as well the NCUA and California Department of Financial Institutions for the Chatsworth, Calif.-based institution’s failure in a material loss review released March 20.
The Inspector General’s recommendations in the report reveal credit unions can expect a proposed rule from the NCUA this year that will require a higher level of risk based net worth for credit unions with a higher level of concentration or other risks in their MBL portfolios.
Telesis management also concentrated too much power in just two people, Mayo and Executive Vice President Jean Faenza. Faenza was CEO of Autoland and Business Partners, with Mayo serving as chairperson of the board. Twice, Mayo requested and approved a line of credit from Telesis to Autoland, completing the transaction herself as Autoland chairperson and Telesis CEO.
“The CEO appears to have had a persuasive and aggressive management style,” the report said. Mayo was also well known in the industry and viewed as strategically successful. Those two factors resulted in the board tending to “follow her recommendations with little discussion.”