Increasing concentrations of non-agency MBS drove Western Corporate FCU to failure, NCUA said in its amended complaint against former directors and officers yesterday in U.S. District Court.
In 2002, WesCorp's investment concentration policy restricted private label MBS to 950% of capital. That limit was raised to 1700% of capital in 2003 and 2150% of capital in 2005, reaching a high of 2300% in December 2007, the agency detailed.
Officer defendants never proposed, and director defendants never adopted, any concentration limits or concentration reporting for Option ARM MBS or lower tranche investments, NCUA said. Instead, WesCorp reported only ratings and FICO scores.
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