The NCUA could have reduced losses to the share insurance fund had the regulator done a better job of identifying and following up on fraud risk factors at the failed $5 million El Paso Federal Credit Union, according to a material loss review dated Aug. 28.
The report released by NCUA Inspector General James Hagen said the Texas credit union, which was liquidated Sept. 28, 2012, also blamed former Manager Lou Hernandez and financially unsophisticated volunteers for the failure. And, the report revealed that the credit union's examiner-in-charge later joined the credit union's board.
Examiners failed to note or question excessive fee income and other unusual transactions, including non-member shares, on two Call Reports in 2009 and 2011 that did not appear on other Call Reports.
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