The former Western Corporate Federal Credit Union board's decision to concede the NCUA's March 20 conservatorship came down to fiduciary responsibility.
According to former WesCorp board chair Bob Harvey, the group met four times and received counsel from several law firms. All shared the same opinion: no financial institution has ever successfully contested a conservatorship.
The loss of capital smarts for WesCorp members, but a lawsuit would smart even worse, Harvey said, as credit unions would pay the legal bills for both sides regardless of the outcome. As conservator, the NCUA must allow the former board to contest the action, which includes covering those costs. The NCUA would also be financially responsible for its own legal defense. Ultimately, the NCUA is funded by federally insured credit unions.
"The real issue is, we would not be justified in extending a huge expense when we have no hope of winning, it's just not right," Harvey said. "In making the decision as the former board, our fidicuary responsibility still remains. We must be prudent."
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