WASHINGTON — The Centrix Financial Chapter 11 bankruptcy prompted a new reminder from NCUA last week about CUs having "effective controls" in place to handle third-party risk.
Responding to a query from Credit Union Times about Centrix, an NCUA spokesman speaking on behalf of NCUA Chairman JoAnn Johnson noted that with specialized indirect auto lending programs becoming more prevalent the agency "strongly believes it is essential that credit unions have effective controls in place commensurate with the risks."
"Recognizing the risks associated with third-party arrangements, since 2001, NCUA has issued several forms of guidance, such as letters to credit unions and Risk Alerts," said NCUA.
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These documents on the NCUA Web site, said the spokesman, are designed to educate CUs about the risks inherent in such programs as well as "provide guidance on how to mitigate those risks" as well as practice necessary due diligence.
In two other separate but related developments last week, Michael Richman, a New York attorney representing the lead Creditors Committee of CUs with court claims against Centrix, said negotiations with prospective buyers, Falcon Investment Advisers, Everest Reinsurance Holdings Inc. and current CEO Robert Sutton, were going well and that a sale could possibly be completed by Jan. 11-12.
Those are the dates a Denver judge has set as an auction to review bids from all buyers.
"It looks promising that a sale could go forward," said Richman, attorney with Foley & Lardner, a leading bankruptcy firm. That would be a good sign for CUs, he said, since that would preserve Centrix' ongoing service business.
In another development, it was disclosed last week that the chief spokeswoman for the firm in dealing with the media, Lauren Baker, vice president of communications, left Centrix on Nov. 30. Calls were being referred to Kevin Barry, executive vice president. –[email protected]
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