Oct. 26, 2012 – House Oversight and Investigations Chairman Darrell Issa, R-Calif., wants NCUA’s inspector general to answer questions about NCUA’s use of contingency fee contracts with outside attorneys in connection with its efforts to recover costs related to corporate credit union failures.
The Wall Street Journal (“Nice Payday for ‘Toxic’ Work”) reported on a letter in which Issa asks NCUA Inspector General William DeSarno whether the arrangements used by NCUA were “the best possible alternative given the circumstances” and if they are covered by an executive order barring such arrangements by executive agencies. Issa notes previous correspondence with agency Chairman Debbie Matz on the issue as well.
NCUA has reported settlements totaling $170.75 million so far in its suits against investment firms and banks involved in residential mortgage-backed securities purchased by U.S. Central Corporate FCU and Western Corporate FCU, and which later went bad. Issa, in his letter, says the two outside firms representing NCUA in settled cases were entitled to more than $40 million of that.
NCUA would not comment on the request from Issa but reiterated its goal of reducing costs to credit unions.
“Credit unions benefit from NCUA’s legal efforts. Recoveries help reduce what credit unions – owned by their members – have to pay to cover the losses of the failed corporate credit unions,” said NCUA public affairs specialist John Fairbanks. “NCUA retained specialized outside counsel consistent with agency policies and with applicable law. The Office of the Inspector General functions independently of the NCUA Board, so we cannot comment on its activities.”