Friday, August 01, 2014

Working With The Ombudsman On IMCR: "NCUA - It Will Be A Joy..."

For the past two years - up until about 10 am yesterday! - if you had gone to the NCUA website to find out about the Ombudsman position here's what you would have seen:

Kinda hard to read the fine print, but it basically says "We don't know what you're talking about"!

Rep. McHenry ain't
Interestingly, Chair Matz has been touting the Ombudsman to Congress (those unfortunate letters!as the antidote  to that little "brown shirted" IMCR (individual minimum capital requirement) provision slipped into the proposed rigged-based capital (RBC) rule.  As has frequently been the case with the RBC rule, truth seems well-distanced from fact in much of what NCUA claims.

"We don't know what's wrong,
if you don't tell us."
Is the Ombudsman position really  the independent safety valve which will protect credit unions from the Agency we all have had the joy of watching "operate with such competence, trust and grace" on this RBC rule?  

Well, decide for yourself. You might like to check out what NCUA's own Office of the Inspector General (OIG) said in August, 2012 about the Ombudsman position in this report (pages 25-30 are particularly enlightening!) The OIG report basically says that the "Ombudsman concept" was required by the 1994 Riegle Federal Act, but NCUA still hadn't gotten around to implementing the law correctly by 2012.   As you can tell from the OIG report and the overly-obvious, website snafu; the Agency really takes this Ombudsman stuff seriously.

But what will really put your mind at ease, about the assured fairness, impartiality, and independence of "our protector from all harm," is simply to take a look at the incumbent Ombudsman....

Thursday, July 31, 2014

Explaining The IMCR Appeals Process: THE OMBUDSMAN...

Mr. McHenry
As you know, Representative Patrick McHenry (R-NC) -  who sits on the House Financial   Services Committee - wrote to Chairman Matz on July 7th, asking for a little more information and a whole lot more explanation on NCUA's proposed rigged-based capital (RBC) ruleChairman Matz was prompt with her response on July 18.

Nice work!
But, as has been typical of NCUA's prior ham-handed, efforts on RBC damage control, Ms. Matz's letter only succeeded in fanning the flames of controversy higher - now Rep. Jeb Hensarling, Chair of the House Financial Services Committee, has jumped into the fray!  NCUA continues in its inept Congressional correspondence to make the Veterans Administration (VA) - apparently unintentionally - look completely competent!  
VA - roooom!

So what would a normal, reasonable person do in this ever evolving self-inflicted,  political disaster? Quit while you're behind - right? Well no, Chair Matz decided to "double-down" and write another
letter !!!! This time to Chairman Hensarling!! (With exactly the same results!)
No noose is
good noose!

Again, the key burning issue, for most credit unions in the RBC rule, is the "individual minimum capital requirement" (IMCR), which gives the increasingly erratic leadership of the NCUA unlimited, capricious authority to single out and persecute any credit union - without appeal nor due process provisions.

Chair Matz has taken up the IMCR issue at several different venues, including the listening sessions and in her letters to Representatives McHenry and Hensarling, protesting that the proposed IMCR rule does in fact include full, independent appeal rights for every persecuted credit union through NCUA's Ombudsman. Here's the exact wording from the proposed RBC rule:

747. 2006: Review of order imposing IMCR

"9) Ombudsman.  A credit union may request in writing the recommendation of NCUA's ombudsman to modify or to not issue a proposed IMCR..."

We're always right!
Well, it looks to me that Ms Matz is right! The proposed rigged-based capital (RBC) rule does in fact permit credit unions to appeal their persecutions through the existing NCUA Office of the Ombudsman process.  So, I thought I'd venture over to the official NCUA website ( - About NCUA/Org. Chart) and take a look at how the ombudsman works. Here's what I found...

Wednesday, July 30, 2014

Tuesday, July 29, 2014

NCUA RBC Rule: Time to Save Grace?....

What are the
real issues?
Y'know, in going back over the multitude of comments made on NCUA's proposed risk-based capital (RBC) rule - in 2,000+ comment letters, listening sessions, Congressional letters, news clips, opinion pieces and conference speeches - three key questions surface repeatedly  to the point of discomfort.  The three recurring issues are 1) competence, 2) trust, and 3) grace.

Competence - No one expressed this concern any clearer than Steve Van Beek at the recent NAFCU Annual Conference, when he told the CUJournal: "The biggest concern is it feels as if NCUA did not do its homework upfront. They did not talk to credit unions, and they did not talk to the trade groups - and there were offers."

What's truly unnerving to many credit unions is that Chairman Matz effectively and almost casually confirms this lack of due diligence by the Agency in such remarks as these from the Alexandria Listening Session:

"We know that all the risk weights need to be reviewed.  We know we need to change [lower] investments, CUSOs, corporates, mortgages, and business loans." [at 3:30 on the tape]

"I want to assure those of you who do "ag" lending and taxi medallion loans that it was never our intention to put you out of business. So for sure we will remedy that situation." [at 4:15 on the tape]

[On individual minimum capital requirements - IMCR] "What's surprising is that that exact provision is in existence today and we have never used it because it is so cumbersome and difficult to use."[at 6:30 on the tape]

Trust - Over the last few years, many credit unions have grown "to feel like Charlie Brown" in their relationship with the NCUA ....

Monday, July 28, 2014

"You Can't Always Get What You Want, But If You Try Sometimes You.." *

"You don't know what to ask for, if you don't know it exists."

(Why not just ask for what you need?)

* It's from a Rolling Stones song, for those of you too young to know....

Sunday, July 27, 2014

NCUA Call Report: Credit Union Membership - A "Potential" Stochaste...

The "buzz" has already begun on the countdown (
UFG !!
perhaps that should be "countup"?) to the magical number - 100 million credit union members in the U.S.! 

Definitely a watershed moment - right?  CUNA in its excitement has even put aside the UFG campaign (don't try to make that into some sort of vulgar text message abbreviation - it stands for Unite For Good!) in favor of a spiffy "100 million member Flashdash".
In the "loop"..."robustly"??

What's even better than the trade association push, however, is the cooperation from the NCUA in validating - through those ever important, "file-on-time-or-die" 5300 Call Reports - the official, Federal agency confirmed membership count.  As always we can rely on the economic robusterians and stochastically-enhanced gnomes over on Duke St. to give us the right metrics....

Saturday, July 26, 2014

Getting There....

You expect me to do what...?!

Not sure about the logic of telling a new employee that...

 "The sky is the limit!"!

... when in reality most folks usually "get there" by "digging ditches".

Friday, July 25, 2014

RBC Listening Sessions: The Final Diagnosis...

An unappetizing mixture
of fruits and nuts.

After listening to the Agency's responses, reactions, and tone at all three sessions:


"Irrational minds can create a climate of fear and blame."

"People with a disposition toward extreme paranoia see betrayal and disapproval everywhere. Believing that people are out to get them, they frequently misinterpret situations, seeing hidden meanings and potential threats in ambiguous circumstances. Consumed by their own fears, they fail to read the motivations and intentions of others."

- Financial Times (7/18/2014)

Yep, seems quite clear that the RBC intransigence of the Agency is a classic case of...

Thursday, July 24, 2014

NCUA's Risk-based Capital (RBC) Rule: Tee'd Up....

NCUA:  "Now hold on, let me explain
where we were heading with IMCR..."
Think most credit union folks agree that the most disconcerting provision in NCUA's proposed RBC rule is the section - called individual minimum capital requirements (IMCR) - which gives NCUA staff the unfettered right to unilaterally impose whimsical, arbitrary capital standards on any and all credit unions.  NCUA is backpedaling as hard as it can go to "explain away" the clear, unequivocal wording on IMCR in the published text. 

Representative Patrick McHenry (R-NC)
Duke St. Laundromatz -
The Spin Cycle!
Hopefully Representative McHenry and the House Financial Services Committee will not buy the desperate, unartful spin now being churned out by the laundromatz over on Duke Street.

But in case you needed more proof, the NCUA examiner staff have just been issued...

"The Official NCUA RBC SOUVENIR T-Shirt"...

Wednesday, July 23, 2014

Analyzing The Chances For A Second RBC Comment Period...

Have some late breaking good news! 

We're colorful !!
The "Crayola economists" over at the Agency have issued a new forecast on the likelihood that Chairman Matz will be reasonable and permit a second comment period on the proposed risk-based capital (RBC) rule!
... see!

Their latest forecast used the very same "robust", quantitative methods applied by NCUA when formulating the RBC rule - and those "risk weights"!  Based on those precise, exacting techniques; the Office of the Chief Economist, in conjunction with E&I and the Capital Markets group, predicts that Chairman Matz will change her mind when...