Some justice.

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.

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One thought on “Some justice.

  1. You and your readers may be interested in my new book, Development of the Modern U.S. Credit Union Movement 1970-2010.

    It explores the transformation of many American credit unions from small, limited service institutions run largely by volunteers to today’s full-service, professionally staffed institutions serving more than 90 million members.

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    The 379-page book discusses the impact of these developments on credit union size, structure, and philosophy. It places credit unions in the context of the nation’s major economic events and trends, from the Great Inflation of the 1970s to the S&L debacle of the 1980s to the Great Recession of late 2007-2009. Among other things, it touches on the role of credit unions in community development and African-American and feminist history. It also gives a detailed description of two historic credit union frauds — Hyfin Credit Union and Franklin Federal Credit Union.

    I am a journalist and student of credit union history. I served as speechwriter for the leadership of the Credit Union National Association (CUNA) from 1986 to 1998. I am a certified Credit Union Development Educator (CUDE). In preparation for writing the book, I interviewed many credit union leaders and studied the extensive written record of the period.

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