Lax management plus bad investments equaled a $141 millionloss.

That in a nutshell is the conclusion of the NCUA InspectorGeneral in its report on the failure of Plano, Texas-based SouthwestCorporate.

That conserved corporate later merged with Georgia Corporate tocreate Catalyst.

As to why Southwest failed, the Inspector General minced nowords. “We determined Southwest's management and Board of Directors(management) did not implement appropriate risk managementpractices to adequately limit or control significant risks in itsinvestment strategy.”

The Inspector General continued: “Management's actions resultedin substantial exposure to privately-issued RMBS [residentialmortgage backed securities], which resulted in significantconcentration risk and left Southwest vulnerable to significantcredit, market, and liquidity risks.”

In the process, the report throws darts at NCUA's own staff. “Wedetermined that NCUA Office of Corporate Credit Unions (OCCU) staffdid not adequately and timely address the risks associated withSouthwest's direct concentration of and indirect exposure toprivately issued RMBS.”

The Inspector General assured, however, that in light of thisfailure, NCUA has taken steps to improve its oversight and tocreate a “stronger regulatory framework.”

The Inspector General issued similar conclusions recently aboutConstitution Corporate and Members United corporate credit unions.