Poor decisions by management, including risky investments and inadequate oversight by examiners, caused the failure of Ensign FCU and Clearstar Financial CU, which cost the NCUSIF $42 million, according to reports by the NCUA’s Office of Inspector General.

The failure of Ensign, which is likely to cost the NCUSIF $30 million, was caused by management’s failure to “implement appropriate risk-management practices.” These included allowing 40-year mortgages, allowing loan-to-value ratios on HELOCs to rise to as high as 100%, and not having a proper allowance for loan loss methodology.

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