WesCorp's management didn't manage risk well and invested too heavily in residential mortgage backed securities while NCUA examiners failed to "adequately and aggressively" address the risks.
That's the finding of the Materials Loss Review conducted by the NCUA Office of Inspector General; the NCUA placed WesCorp into conservatorship in March 2009. The loss to the Temporary Corporate Credit Union Stabilization Fund is estimated to be about $5.59 billion.
"Management's actions allowed a substantial investment portfolio of privately-issued RMBS, resulting in a significant concentration risk, and left WesCorp increasingly vulnerable to significant credit risk, market risk, and liquidity risk through the portfolio's exposure to economic conditions in the residential real estate sector," the report concluded.
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