Magazine article American Banker

Credit Unions Challenge NCUA's Version of Cap Corp Oversight

Magazine article American Banker

Credit Unions Challenge NCUA's Version of Cap Corp Oversight

Article excerpt

The effects of liquidating Capital Corporate Federal Credit Union linger on for the National Credit Union Administration.

Renewed interest in the 1995 failure couldn't come at a worse time for NCUA Chairman Norman E. D'Amours, whose overall management of the agency is under fire.

In a letter this month to Rep. Marge Roukema, R-N.J., more than 100 credit unions disputed the NCUA's explanation of Cap Corp's supervision and operations.

Pentagon Federal Credit Union chief executive Ronald L. Snellings said the NCUA's version of events was "just plain wrong."

"We wanted to keep the record straight," Mr. Snellings said in an interview. "The losses we felt are attributable to the NCUA, and we want Congress to recognize that."

Several congressional hearings were held last year, including one by Rep. Roukema, to evaluate NCUA's handling of the Lanham, Md., corporate credit union. Those hearings prodded the agency to clamp down on the 41 surviving corporate credit unions, which serve as liquidity centers for regular credit unions. Proposed rules were issued for public comment last week.

Trying to put the issue to rest, NCUA in April released a document designed to answer commonly asked questions raised by the liquidation.

On May 3, Mr. Snellings wrote Rep. Roukema, chairman of the House banking financial institutions subcommittee. Among other things, he questioned the NCUA's claim that it warned Cap Corp in 1992 to carefully monitor a number of volatile securities in its portfolio. …

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