When this story broke, it happened to be around the same time that the Corporates went through their debacle. Thus the astonishing amount of theft paled in comparison to the investment losses of the likes of WesCorp and, incredibly, the story did not get the same amount of attention. Yet, the incident continues to affect credit unions now and will continue to impact the movement for years to come.
It’s not just the damage to the insurance fund that makes the effects of the fraud so far reaching. The examination process has been forever changed. No examiner wants this to happen on their watch going forward. The amount of the loss, estimated at $170,000,000, is breathtaking for a natural person credit union and constitutes the single largest loss to National CU Share Insurance Fund for a natural person credit union. Reading the NCUA report on how it happened is compelling.
But the damage is done. I’m seeing it firsthand. Not only are the state and federal regulators feeling pressure from the economy, they are also managing the specter of St. Paul. This translates on the street level to more inquisitiveness on the part of examiners and more work for CEO’s and their staff. Some might say that’s a good thing but others might be less sanguine. Credit unions are already scrambling to meet greater compliance burdens on the lending side as well as increased monitoring burdens under BSA, OFAC and the PATRIOT Act. Board members are starting to adjust to a world where greater competency is mandated and personal liability for credit union missteps is very real.
But at least as the people involved with St. Paul have been brought to justice. It’s up to us to live in the post St. Paul world.