This week, National Credit Union Administration (NCUA) Chairman Rodney E. Hood faces questioning from the Senate Banking Committee. Here’s what we would ask Chairman Hood at the hearing:
- Earlier this year, it was reported that an employee at CBS Employees Federal Credit Union in Studio City, California, embezzled more than $40 million over a 20-year period. How did NCUA miss this case for more than 20 years – in addition to the other 20+ cases of embezzlement and fraud reported in 2018?
- In the CBS Employees Federal Credit Union case, the guilty employee was also a former 30-year NCUA examiner, and he acknowledged that his experience working at your agency made it easier for him to commit his crimes. Have you established any standards as to credit union employee eligibility to prevent anyone with inside knowledge like this beating the system?
- From our understanding, your agency is supposed to inspect credit unions every 18 months at a minimum. If that procedure was followed in this case, CBS Employees Federal Credit Union was inspected at least 19 times while this was happening, and still no one seemed to catch this employee. What measures are taken during the examination process to fully inspect a credit union and ensure it is protecting members?
- The assets of failed CBS Employees Federal Credit Union were assumed by University Credit Union, as mandated by your agency. How does this acquisition solve the problems that come with a credit union failure, and ensure this does not happen again in the future?
- The NCUA Inspector General’s Material Loss Review published in late March cited a lack of “timely and aggressive supervisory approach regarding the credit unions’ concentration risks in their loan portfolios” as the biggest reason why the NCUA Share Insurance Fund booked a significant $765.5 million loss in 2018. Do you agree with the conclusions in this report and admit that more could have been done?
- The NCUA Inspector General specifically also cites the failure of three credit unions engaged in taxi medallion loans in the March Material Loss Review. Looking at market trends from an outside perspective, it seems obvious these loans were risky due to the influx of ride share services. What research, if any, does your agency conduct to determine the safety and soundness of different loans by credit unions?
- The NCUA’s Inspector General’s Material Loss Review says it took the agency almost three years to send credit unions a letter expressing its concerns with the safety and soundness of taxi medallion loans. A lot of people’s money could have been saved during that three-year gap. Why did writing that letter take your agency so long? And why was writing a letter all you did?
- In the NCUA letter to credit unions warning them of the dangers of taxi medallion loans, were there any effective threats of consequences to any credit unions that did not adhere to your suggestions, and did any of the credit unions back off on their risky lending practices once receiving the letter?
- Overall, the NCUA Inspector General’s Material Loss Review does anything but sing your agency’s praises – in fact, it nearly blames your agency for many recent and massive industry failures. How are you as an agency responding to these findings and what changes are being made to protect the industry from bad actors?
- The Inspector General’s Material Loss Review cites a $750 million loss in the NCUA Shared Insurance Fund due to credit union failures. This money is backed by taxpayers’ wallets. So, what is your agency really doing at the end of the day to protect taxpayers?
We applaud Congress for reviewing NCUA’s regulatory practices. The Inspector General’s Material Loss Review demonstrates the many reasons why holding NCUA accountable is needed now more than ever – and we’re glad Congress is taking the issue seriously in order to protect credit union members and taxpayers.