At a time when the NCUA and the trade groups are pushing Congress to raise the cap on member business loans, the agency's inspector general faulted its examiners for insufficient oversight of the business lending at now-shuttered High Desert Federal Credit Union.
The examiners "did not adequately evaluate the risk" in the credit union's real estate construction portfolio, and although examiners noted violations of NCUA regulations, they failed to take adequate steps to punish the credit unions, according to the inspector general's report.
The NCUA placed High Desert FCU, which was headquartered in Apple Valley, Calif., into conservatorship in October 2008. Its assets and some of its liabilities were purchased and assumed by Alaska USA FCU and the cost to the NCUSIF was $24.1 million. Real estate construction loans made up 60% of the credit union's loan portfolio in 2005, 2006 and 2007.
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