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NCUA backs tougher enforcement promise
ALEXANDRIA, Va. (4/21/10)--As promised last November, the National Credit Union Administration (NCUA) is increasing public disclosure of its interactions with troubled credit unions. The NCUA recently disclosed a pair of letters of understanding that the agency entered into with management at a pair of credit unions. These letters were meant to “correct noted adverse conditions” such as “untimely and inaccurate recordkeeping,” inadequate recordkeeping processes, and loan issues that were “of concern” to the NCUA. Specifically, the NCUA after an in-house examination found that outstanding items on one credit union’s reconcilements were over six months old and had not been cleared. In addition, the NCUA said that general ledger account reconciliations were “not consistently performed in a timely manner.” The NCUA also criticized the credit union for failing to base its loan limits on “credit risk and income levels.” In another separate letter released by the Agency, a credit union agreed with NCUA demands to “accurately complete applications for all new members” and offer credit union services only to those members. The NCUA during an examination found that the credit union “took an overly expansive view” of its field of membership and “accepted share accounts from, and extended loans to, individuals otherwise unqualified for membership.” NCUA Chairman Debbie Matz said late last year that while the NCUA did not intend to discourage lending, its examiners would take public administrative actions to ensure compliance by credit unions and could potentially follow up with public letters of understanding and agreement or cease and desist orders if a credit union has not followed NCUA recommendations. For the NCUA letters, use the resource link.
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