On page 14 of the document, which can be viewed in full at this link, the NCUA noted it had two legislative priorities in addition to obtaining vendor supervisory authority. 

The first was to revamp the largely abandoned Central Liquidity Facility, and the other was risk-based NCUSIF premiums modeled after the FDIC's structure.

To its credit, the NCUA had mentioned NCUSIF reform in its strategic plan released in early 2014, which Leggett had also covered in his blog. 

As an aside, that Leggett knew so much about the NCUA's agenda sure made CUNA look foolish when it said in a release two days after news of the white paper broke it was not aware the NCUA had ever raised the issue on Capitol Hill. At least NAFCU, who like Leggett noticed Fazio's fine print, fired off a letter to Matz shortly after the Senate hearing.

You can't ever count out a federal agency's political muscle, but this issue deserves some perspective. Even if the agency finds someone willing to sponsor the bill, Republicans won't advance any legislation that essentially expands Dodd-Frank. 

Plus, a risk-based share insurance funding scheme shouldn't be necessary if credit unions are required to maintain risk-based capital. As the trades and comment letters have rightly stated, if RBC2 has been watered down so weak it doesn't mitigate risk at large, complex credit unions, it needs to be scrapped. 

Perhaps the NCUA needs to bulk up the share insurance fund because it's so bad at supervising its insured institutions. 

I'm referring, of course, to the $603 million Alabama One Credit Union. 

On Friday, April 3 – Good Friday, mind you, when courts weren't scheduled to hear cases – CEO John Dee Carruth took the stand in a bankruptcy case in an attempt to lift a stay on property owned by used car salesman, convicted check kiter and straw loan beneficiary Danny Ray Butler. The property in question included a proposed water treatment plant and 178 acres with a $7.1 million note.

CU Times then uncovered another alleged fraud case in which members accused an Alabama One employee – the same one accused of facilitating the fraudulent Butler loans – of stealing $22,500 from their HELOC.

By our count, the potential losses due to fraud are in the tens of millions of dollars, and that's just counting the loans we've managed to dig up so far. Alabama One's net worth decreased from 11.59% in December 2013 to 10.40% one year later. The credit union recorded a 2.44% net loan charge-off in September 2014 and another 1.92% charge-off in the fourth quarter. Alabama One also reported a $7.8 million net loss on the year. It will be interesting to watch the credit union's financials and net worth this year.

While the fraud alleged by members is disturbing, what's even more disturbing is the failure of the Alabama Credit Union Administration and NCUA to get to the bottom of this sooner.

This story line isn't new; we first reported fraud involving Butler and Alabama One in October 2013, and the allegations first surfaced in 2011. 

About a year ago, former ACUA Administrator Larry Morgan resigned after he suspended four Alabama One employees, including Carruth and Ewing. They were quickly reinstated and Alabama One claimed victory over manipulative trial lawyers.

Regulators should have left no loan document unturned in this credit union long ago. 

The NCUA refuses to grant interviews on Alabama One, but it should answer the question of why CU Times seems to know more about fraud allegations at a $600 million federally insured institution than its insurer.