LOS ANGELES – Lawyers for NCUA yesterday defended their bid to bar testimony from NCUA Board members Debbie Matz and Gigi Hyland in the civil trial of former WesCorp FCU CEO Bob Siravo by insisting the two Board members “have no direct personal factual information” about the 2009 collapse of the one-time $34 billion corporate credit union.
The NCUA lawyers are seeking to block Siravo’s request to depose the NCUA Board members in his attempt to prove that the risky investments that sunk WesCorp were approved of before hand by NCUA. The NCUA lawyers claim that federal law bars the depositions of high agency officials unless those officials have a “direct personal factual information pertaining to material issues in an action” or “the information to be gained is not available through other sources.”
A court hearing on the NCUA bid is scheduled for July 31.
In pleadings filed yesterday with the U.S. District Court for the Central District of California, NCUA lawyers said Matz only joined the NCUA Board in August 2009, five months after NCUA seized the corporate giant “and she therefore "lacks direct personal knowledge of events occurring prior to WesCorp’s failure in March 2009.”
The pleadings do not address Matz’s earlier service on the NCUA Board, from January 2002 to October 2005, when she was asked to vote in closed meeting numerous times on requests by WesCorp for exemptions from NCUA’s regulations in order to invest in exotic mortgage-backed securities. Siravo claims NCUA knew of and approved of the WesCorp investments as far back as 2005, when Matz was serving her first term on the NCUA Board.
The NCUA lawyers also argue that Hyland’s 2008 public remarks about the safety of MBS investments by corporates were about corporates in general, and not specifically about WesCorp, and they say Siravo can obtain the information sought about WesCorp from NCUA sources other than Hyland. Hyland has served on the NCUA Board since November 2005 and prior to that was the chief lobbyist for the corporates.
NCUA is also trying to prevent Siravo from deposing Kent Buckham, who was chief corporate examiner prior to the WesCorp collapse and is now director of the agency’s office of consumer affairs.
NCUA does not comment on pending litigation.
Siravo is one of five senior WesCorp executives sued for negligence by NCUA in the historic corporate failure, projected to cost credit unions $7 billion to resolve. Three of the executives have settled the NCUA charges, with Siravo and Todd Lane, who was WesCorp’s chief financial officer, continuing to contest the civil charges.
The collapse of WesCorp and four other corporates is projected to cost credit unions as much as $21 billion to resolve.