IG Slams Execs, Board and NCUA for Mistakes on Members United Corporate FCU

Poor investment decisions by executives and volunteers and inadequate oversight by the NCUA were the key factors in the heavy losses at Members United Corporate Federal Credit Union that caused the NCUA to have to conserve it, the agency's Officer of Inspector General concluded.

"Specifically, management and the board's inadequate oversight resulted in Members United purchasing significant holdings of private-label mortgage-backed securities, many of which were later downgraded to subprime and Alt-A, that exposed the credit union to excessive amounts of financial risk," according to the report.

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The report concluded that the credit union's management didn't establish proper concentration limits, relied too heavily on outside ratings agencies, didn't properly monitor credit risk exposure and relied on the corporate credit union structure to provide financial strength and liquidity.