NCUA examiners could have potentially reduced the $76.5 million hit the National Credit Union Share Insurance Fund took as a result of the failure of the $259 million Chetco Federal Credit Union, according to a material loss review report published by the regulator's Inspector General.

The Harbor, Ore.-based Chetco was placed into conservatorship in September 2011; the NCUA liquidated the institution on Dec. 31, 2012. Although the report published this week squarely placed the blame on Chetco's management and board, it also said examiners should have taken a more timely and aggressive approach regarding Chetco's risks in its member business lending portfolio. In 2008, member business loans grew to more than 600% of net worth, thanks to a series of MBL cap waivers the credit union had received due to its low-income status and history of business lending.

NCUA could have reduced NCUSIF losses had they better understood the complexity and magnitude of Chetco's MBL risk and expanded the credit union's supervision, the report said.