ALEXANDRIA, Va. NCUA said it failed to recover any payments on insurance held by WesCorp FCU, U.S. Central FCU or any of the other three corporate credit union failures, despite millions of dollars in directors and officers premiums paid by the failed corporates.
NCUA said yesterday it failed to obtain recoveries on any claims on the U.S. Central D&O bond on 18 executives and directors of the one-time $52 billion corporate with Travelers Casualty & Surety Co., which the agency announced as long ago as July 1, 2010 it was pursuing. In June 31, 2012 demand letters NCUA delivered to top U.S. Central figures, NCUA alleged that breaches of fiduciary duties of care and loyalty contributed to US Central losses exceeding the $10 million Travelers policy limit, which was in effect from 2005 to 2009, when NCUA took over the failed corporate.
NCUA has been secretive about the details of the corporate resolution and has declined to say whether it pursued the bond claims and if so, why it was not successful in recovering anything.
And a WesCorp D&O policy with CUNA Mutual Group also came to naught because of an exclusion for investment losses. Such exclusions are not uncommon in policies covering liability of directors and officers, according to NCUA. WesCorp paid CUNA Mutual $1 million a year in premiums on its various coverages, according to documents filed in NCUA’s lawsuit against WesCorp figures.
NCUA also has no bond claims regarding the failures of Members United Corporate FCU, Southwest Corporate FCU and Constitution FCU, either, despite NCUA regulations requiring that all corporates carry D&O coverage, as well a surety bonds.
Any recoveries on corporate bonds would be included in the accounts for the resolution of the five failures and go to defraying the cost of the corporate bailout, currently projected to be around $16 billion.