WASHINGTON (12/10/13)--The systemic losses created by the failure of G.I.C. FCU, Euclid, Ohio, could have been mitigated with more aggressive National Credit Union Administration oversight, the NCUA Office of the Inspector General (OIG) wrote in a recent material loss review.
G.I.C. FCU served 3,476 members and had assets of approximately $15.5 million before it was closed in December 2012. The agency said it liquidated the credit union after determining it was insolvent and had no prospect for restoring viable operations.
The OIG material loss review reported that G.I.C. FCU failed due to an overstatement of $8.1 million in assets, primarily investments in certificates of deposit and cash, allegedly due to fraud.
Questionable management integrity and performance, weak supervisory committee oversight and weak board oversight "created an environment in which assets could be vastly overstated," the review said. Specifically, the review found that:
The above issues could have been detected, and losses could have been prevented, if the NCUA had been more aggressive in requiring the completion of supervisory committee audits, confirmed account balances directly with institutions, and addressed risks related to supervisory committee and board of director failures, the OIG wrote in the review.
To prevent similar situations in the future, the NCUA OIG recommended the agency:
For the full material loss review, use the resource link.