When the giant San Dimas corporate credit union known as WesCorp went under in 2009, bad mortgage-backed securities were blamed for the debacle. Now, federal regulators are taking action against the sellers of those losing securities.
The National Credit Union Administration filed a lawsuit last week against Barclays Capital Inc. for allegedly misrepresenting the safety of $555 million in securities sold to WesCorp and U.S. Central Federal Credit Union, which also failed.
“Trust and accountability are two cornerstones of our financial system,” said NCUA board Chairman Debbie Matz in a statement. “As clearly outlined in our complaint, Barclay’s violated that trust by issuing faulty disclosures on securities underwritten by the firm.”
Barclays, based in New York, did not respond to requests for comment.
Over the past year, the agency has reached settlements on separate claims against Citigroup, Deutsche Bank Securities and HSBC totaling $171 million. The NCUA said it is “the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.”
WesCorp had been one of the country’s largest wholesale credit unions, which provide services to retail credit unions rather than individuals. The institution, which was tasked with investing funds from its credit union members, lost more than $7 billion during the financial crisis, largely from investments in mortgage-backed securities.
The wholesale operation was closed in early 2009 by the NCUA, which liquidated WesCorp’s assets this past July.
The suit against Barclay’s was filed in U.S. District Court in Kansas, where U.S. Central was based.
Digital Transition
With the NCUA’s help, two local credit unions are finally coming into the digital age.
The agency has agreed to donate laptop computers to 14 small credit unions across the country that are still filing their quarterly reports and keeping records on paper. The institutions, which each have less than $10 million in assets, include two local credit unions: Zion Hill Baptist Church Federal Credit Union in Los Angeles and San Fernando Valley Japanese Credit Union in Sylmar.
The initiative is part of an NCUA effort to reduce waste by eliminating paper call reports by next year.
Investor Workshop
Pssst – wanna buy a bank?
The Federal Deposit Insurance Corp. can help.
The bank regulatory agency has announced a workshop in Los Angeles and two other cities for investors interested in acquiring assets of failed banks.
The FDIC said the program is designed for all types of investors, including hedge fund managers and private-equity firms. The agency particularly hopes to draw minority and female investors.
The workshop is scheduled Tuesday near the Los Angeles International Airport.
Restated Earnings
Broadway Financial Corp., L.A. parent of Broadway Federal Bank, has restated earnings for the year 2011 and the first quarter of this year.
The company lowered its first quarter loss with the restatement, from $346,000 to $132,000.
The change came after the thrift holding company moved a portion of the loss provision from the first quarter to the previous year. Broadway increased its 2011 loss from $10.6 million to $15.4 million.
The company said it restated results after discovering errors in the appraisals of certain impaired loans.
C-Suite News
Greg Mitchell has resigned as chief executive of Irvine’s First PacTrust Bancorp Inc. and its subsidiaries. L.A. investment professional Steven Sugarman, who was on the board, was appointed chief executive of the holding company. Robert Franko, who already heads subsidiary Beach Business Bank in Manhattan Beach, will take over chief executive duties at the PacTrust Bank subsidiary. … Manhattan Bancorp, the El Segundo holding company for Bank of Manhattan, has appointed Curt Christianssen interim chief financial officer. … Richard Davis, who has headed the Southern California operations for Bank of the West as an executive vice president, has retired. George Stanfield, the bank’s Southwest division head, succeeded Davis as Southern California division executive. … POPA Federal Credit Union in Cerritos has named Raymond Bartus, the institution’s interim chief executive, to the post permanently. … Bank of America Merrill Lynch, the global banking subsidiary of Bank of America, has promoted Brian Stearns and Daniel Timmons to new roles as co-heads of the L.A.-based entertainment industries unit. … Jesse Torres, chief executive of L.A.’s Pan American Bank, has been appointed to the Community Bank Advisory Council of the Consumer Financial Protection Bureau. … Sun Valley’s Mission Valley Bank has hired Caleb Willis as vice president and relationship manager.
Staff reporter Richard Clough can be reached at [email protected] or (323) 549-5225, ext. 251.
