Summary: Pursuant to a legislative requirement, GAO examined: (1) the financial condition of credit unions; (2) the regulation and supervision of credit unions; (3) the structure of the credit union industry; (4) the evolving role of credit unions in the financial marketplace; and (5) a certified public accountant's audits of the National Credit Union Administration's (NCUA) Operating and Share Insurance Funds and its Central Liquidity Facility's financial statements for 1989 and 1990.
GAO found that: (1) federally insured credit unions are in better condition than banks and thrifts; (2) most credit unions are small and about half have assets of less than $2 million, but the 375 credit unions with assets of $100 million or more hold about 46 percent of the industry's assets; (3) as of December 30, 1990, the National Credit Union Share Insurance Fund's (NCUSIF) equity was $1.25 for every $100 in insured accounts; (4) audits of NCUSIF and other financial statements for the years ended September 30, 1988, 1989, and 1990 were fair and conformed with generally accepted accounting principles; (5) although NCUA took steps to strengthen its supervision of credit unions, further improvements were needed in off-site monitoring; (6) NCUA established policy goals for the resolution of credit unions in weak and poor condition and made progress in meeting these goals; (7) NCUA criteria for granting assistance to failing credit unions were not always met, and decisions on resolution methods for failed credit unions were not adequately documented; (8) there was no assurance of consistency in forbearance decisions among the regions; (9) federally insured credit unions invested $20.4 billion in 44 corporate credit unions; (10) NCUA lacked complete supervisory control over a central credit union and 13 of its member credit unions; (11) although there were no inherent problems in NCUA insurance functions, changes were needed to ensure that the insurance function would be given priority if conditions should deteriorate; and (12) expansions of common bonds helped in merging troubled credit unions, but made it more difficult for members to ascertain other members' creditworthiness.
