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Credit Union Times

AUGUST 8, 2018 | VOL. 29 | NO. 27 | CUTIMES.COM

FOCUSREPORT:

REVENUE GROWTH

Fees have often presented CUs with a moral dilemma: While they’re a good source of noninterest income, keeping fees low helps keep members happy. Learn why many CUs are relying less on fee income these days in this Focus Report. Y6

Must Reads

EMPLOYEE BENEFITS

401(k) Truth Bombs

The problem of missing retirement plan participants continues to receive a great deal of attention from plan sponsors, industry advocates, regulators and politicians.

All parties are keen to address the negative outcomes that result when job-changing 401(k) participants leave behind their accounts with former employers, relocate and fail to update their address.

It may surprise many to learn that there’s another problem that’s orders-of-magnitude worse, which silently devastates millions of Americans’ prospects for a timely or comfortable retirement every year. I’m referring to 401(k) cash outs, and it’s time we took serious action to address them head-on.

When we consider solutions, there’s another surprise in store. The most effective solution for both problems is the same: Retirement savings portability.

Missing Participants Are
Bad

Missing participants are a big headache for plan sponsors, as they’re simultaneously an expense, an administrative burden, a fiduciary risk and a primary driver of plan audits – right up there with delinquent contributions.

Evidence of missing participants first begins to surface when plan mailings are returned undeliverable. Participants Y15

Small CU
Collaboration
New York CUs
team up on
compliance. Y12
MBL Sources
Learn which ones
to avoid to fuel
growth. Y10
INTERNAL FRAUD

NCUA Hits Firm With $10M Lawsuit

n a rare move, the NCUA sued a national business advisory firm for $10 million, and the lawsuit has developed into a fierce battle over whether the accounting company neglected to detect a massive, bizarre embezzlement scheme that liquidated a Cleveland, Ohio credit union and led to a $37 million loss for the industry’s share insurance fund.

The NCUA claimed the Mayfield Village, Ohio-based Skoda Minotti Co. and three of its accountants were allegedly negligent when they audited the $23 million Taupa Lithuanian Credit Union, whose president/CEO ended up on the lam for months when allegations surfaced in July 2013 that he stole more than half of the credit union’s assets over 12 years.

Skoda Minotti – a $53 mil-
lion business advisory firm that
was ranked 80th on Accounting
Today’s list of top 100 firms for
2018 – is denying the NCUA’s ac-
cusations, arguing that the facts
and standards of professional
conduct will bear out that the firm
had no obligation to uncover or
prevent the complex fraud, which
also duped NCUA examiners and
the board of directors for years.
Alex Spirikaitis, the former
president/CEO of Taupa Lithu-
anian who pleaded guilty to
fraud and is now serving a
PETER STROZNIAK
pstrozniak@cutimes.com

Y16

RBC on the
Ropes
REGULATIONS

DAVID BAUMANN dbaumann@cutimes.com

hree years ago, NCUA
Board Member J. Mark
Mc Watters was the lone
vote against the agen-
cy’s Risk-Based Capital rule.
Now, five months before the
rule goes into effect, McWatters
is chairman of the
agency’s board
and perfectly po-
sitioned to kill the
rule, which he con-
tends violates fed-
eral law.
The controver-
sial rule was adopt-
ed in 2015, amid
opposition from credit unions
and some members of Congress.
It requires a “complex” credit
union that becomes undercapi-
talized to take prompt corrective
action to restore its net worth. A
complex credit union was defined
as one with $100 million in assets.
And it was adopted even
though House Financial Servic-
es Chairman Jeb
Hensarling (R-Tex-
as) asked the board
to delay the vote
in order to study
the plan more
extensively.