Federal regulators are seeking more authority over financial institutions such as banks and credit unions. Until they see evidence that the so-called watchdogs are doing the jobs they are supposed to under current law, members of Congress ought to refuse to grant them more power.
A case in point occurred right here in Wheeling. Earlier this year the National Credit Union Administration shut down Center Valley Federal Credit Union of Wheeling. Those with deposits at the credit union were to be reimbursed for any losses, up to the $250,000 federal limit on such insurance.
This week federal prosecutors arrested a Valley Grove woman, charging her with embezzling money from the credit union. The woman, Bernie Metz, 56, formerly was chief executive officer and manager of the credit union.
During a hearing, Assistant U.S. Attorney Robert McWilliams stated that "$5 million of the $9 million missing from the credit union can be traced to Bernie D. Metz."
Nine million dollars may not sound like much in the context of trouble suffered by big national financial institutions during the past year. But here in Wheeling - especially at the Center Valley Federal Credit Union - it's a lot of money.
According to a news release issued by the NCUA in February, when it placed the credit union into liquidation, the institution "had deposits of approximately $8 million."
In other words, before the NCUA noticed anything amiss, someone had looted more than the credit union's total assets at the time of the takeover. That is astonishing, to say the least.
Members of Congress should be demanding answers from the NCUA in regard to the Wheeling fiasco. Were regulators asleep at the switch? What has been done to guard against similar lapses in the future? And, perhaps most important: Why should the public trust federal regulators with more power when they cannot seem to use what they have effectively?