The management team of the now-defunct Norlarco Credit Union inadequately managed its residential lending program, while NCUA and Colorado regulators didn't monitor the credit union closely enough or pay attention to safety and soundness concerns.
Those are the key conclusions of the NCUA inspector general's report on Norlarco Credit Union of Ft. Collins, Colo., which the NCUA placed into conservatorship in 2007 after extensive losses from its real estate investments in Florida.
The report said that the credit union's management failed to conduct a due diligence on its third-party vendor, didn't adequately oversee its residential construction lending program, created a concentration of risk by committing to fund $30 million worth of construction loans each month, and didn't develop adequate policies and a strategic plan to guide the credit union and the loan program.
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