The National Credit Union Administration’s inspector general said the agency should improve how it monitors credit union loan concentrations.
In a report on three New York credit unions that failed due to significant concentration in loans collateralized by tax medallions, the IG also said the agency should revise its exam quality-control procedures and ensure examinations focus on borrowers’ ability to repay loans.
All three credit unions were chartered for the purpose of making member business loans, qualified for an exemption from limits on aggregate loan balances, and were affected by disruptions to the taxi industry, the IG said.
The report said the credit unions failed to manage their loan portfolios safely and soundly, while a more timely and aggressive approach to addressing concentration risk by the NCUA could have mitigated the estimated $765.5 million in losses to the Share Insurance Fund.
Read the IG’s Report