Consumer Financial Protection Bureau....

CFPB - New Super Agency!

The Consumer Financial Protection Bureau (CFPB) descended on Durham, N.C. last week to hold  panel and open discussion sessions on "pre-paid cards", which appear to be one of the next major battlefields in the struggle over fairness in consumer finance.  


Pre-paid cards offer many new opportunities for credit unions to help members better manage their spending and payment transactions, without the penalty risks of NSF fees nor overdraft charges.  Pre-paid cards actually look like a product which can put consumers more fully in control of their finances, with better accountability and responsibility for their actions - a result which should be pleasing to one and all!  


Pre-paid cards may also be the perfect answer for bringing "the unbanked" back into the traditional financial services system, at a much lower cost to the consumer and as a new growth opportunity for credit unions.

Some very sly foxes!

But what I really wanted to mention was how knowledgeable, open, and inquisitive the "top brass" of the CFPB were.  Many of the Agency's leadership were there, including Richard Cordray and Raj Date. They truly understood the issues and obviously knew what they were about!  They even took time to listen to a group of consumer advocates from all across N.C., including credit union representatives.  Never seen such a tour-de-force by a regulatory group - insightful, "up to speed", engaged, definitely "first string players".  And, a truly open, honest dialogue... 

Memorial Day.....

THANK YOU!  THANK YOU!

Haiku For You...

All Knowing

Life does not exist

On the dark side of the Moon.

Why are you so sure?

Jay Birdegg.....

"You are the sunshine of my life,

That's why I'll always stay around."

- Stevie Wonder ("You are.... ", 1972)

From The Field...

"We recently held a staff fundraiser to replenish the food cupboard at the hospital Family House.  Everyone was required to bring several non-perishable food items as a donation.  We ended up with an SUV full of "Let's Refill the Panty" canned goods...."


(Well, demand for food has always been "inelastic"...)

Form Over Substance...?

Wise Move!

Would like to congratulate the NCUA Board and particularly its Chair Ms. Matz on a long overdue change to the reporting of "troubled debt restructurings"(TDRs) and delinquency on the CU 5300 Quarterly Call Report. Don't look so shocked!!  Give credit where credit is due; and this is a tremendously positive and prudent move for a whole lot of reasons.  The proposed change in reporting requirements is on the NCUA Board Agenda for this Thursday, May 24.



Why is this change important? Chair Matz outlines the benefits clearly in the NCUA Board Action Bulletin "NCUA Supports Regulatory Relief in Loan Modification Proposal", dated Jan. 26, 2012 (see www. ncua.gov). Here's what Chair Matz said:


"When credit union officials told me that an NCUA policy was forcing them, in some cases, to foreclose on troubled members seeking lower payments, I committed to change that policy, and my colleagues immediately joined this effort.  In addition to benefiting members, this new TDR policy will also provide relief for credit unions."

NCUA gets on the bus...finally!

The Bulletin also noted that the TDR change would result "in similar parameters as those previously established in the Federal Financial Institutions Examinations Council (65 FR 36903)".  In other words NCUA is the only federal regulator still using this practice....forcing credit unions, "in some cases, to foreclose on troubled members"...


So  what's the catch?  (Knew you would be suspicious of this new found affection for "the big blue"!) Well, one credit union with which I am familiar (yes, lucky guess!) has already reported TDRs under the new approach offering the following reasons:

• We agree with the NCUA Chair.
• Instructions on how to report are already on the NCUA website.
• Been arguing with "big blue" about this for over two years.
• TDR reporting has been so insanely complex and manual that it is clear that this rule has been applied inconsistenly by loan type , by CPAs, by NCUA region, and - as now acknowledged - was out of step with the reporting standards established for other financial institutions.
• The rule has caused much harm to CU members and tarnished the reputation of credit unions in general as reasonable, caring institutions.
• Past TDR reporting has misled users of Call Report data as to the true, comparable delinquency status of CUs vis-a-vis peers and other institutions.
• Past TDR reporting adversely affects only a narrow range of CUs which are 1) heavy mortgage lenders, 2) actively worked to keep members in their homes with good results, and 3) actually reported correctly under a poor rule.
• NCUA staff have been well apprised of this reporting problem for over two years at least and, for whatever reason, did not bring the problem to the attention of the Chair and Board.

So?.....

Haiku For You...

Sensitivity

What's important

Is too difficult to feel

At times without wine.

From The Field...

"The branch has been heavenly involved in giving member presentations this month..."


(Undoubtedly spreading "the gospel" about the CU...)

Pursuing The Safe and Sound Approach....

Taking the "discussion" to new lengths....!

"It's very, very dangerous to be right when the NCUA is wrong."

"Redacted"....

xxxxxxxx  oops! xxxxxxx oops! xxxxxxx oops!


xxxxxx oops! xxxxxx .....


Just another ...

from the NCUA!

Sorry, we promise it wasn't intentional, we just mess up a lot.  


Sincerely, 
(and tough love to 'ya)  


The NCUA (oops!)

Crisis...Opportunity?

 Is the slide in right?

Most of you are very familiar with the classic "powerpoint proverb" which effuses on the idea that the Asian pictogram for "crisis or problem" is also used interchangeably for the concept of "opportunity".  So that within every "crisis" that arises in your life, there lurks a hidden "opportunity"!  Maybe so... maybe not.  


Part of my "opportunity" with this idea is that Chinese/Japanese is usually written from right to left and I've never been quite sure if I had the picture of the symbol shown correctly.  It may be reversed, sideways, heck it may be upside down; but anyway...


Noted in a prior post that the Fed had approved the purchase of a US bank by a trillion dollar foreign bank, controlled by the Chinese government.  First the US exported all the jobs in textiles, then furniture, then electronics - most every job in manufacturing was "put in play".  With this latest move by the Fed, looks like the "banking sector" is next....


Which leads to a thought:  If the Chinese government can purchase a US bank, then certainly a US credit union (or a group thereof) can also purchase a US bank - right?  I mean who do you really trust in all this - right?


Would think that if a credit union could own and control a local bank, then the credit union could provide unlimited business lending to its local communities on a "not-for-profit first" basis. Local ownership, local control, local decision-making, local, local, local.  "Made In America"...what's the problem? 


Looked around recently in your community?  How many of your local banks are headquartered in your State?  Where do those folks who hold the top jobs of leadership and influence in the banks, who sit on the the governing boards, live and work?

Foreign Affairs....

Ah-h-h so!

Hope you didn't miss the approval, given by the Federal Reserve last week, for the purchase of an American bank - The Bank of East Asia USA - by the Industrial & Commercial Bank of China (ICBC).  ICBC, a bank in which the Chinese government owns a 70% stake, has over $2.5 trillion in assets.  


The Bank of East Asia USA is a $780 million institution, with offices in NYC and San Francisco, which focuses on business lending.  And, let's see; last time I checked for-profit banks are obligated to pursue the best interests of their investor-owners.... h-m-m-m!?   


It is difficult to understand why the US Congress continues to refuse to give American owned and controlled credit unions limited additional authority to make business loans in their communities, while welcoming the Chinese government with open arms.


If you can't understand that logic either, perhaps you should ask your US Senators and Congressman to explain it to you - before the next election.


Perhaps your Representatives believe that loan decisions affecting American businesses can be better made in Beijing than on Main Street USA....... Be sure to ask publicly and for the record!


Be sure to tell 'em your members are starting "to see red" on the business lending cap issue...

Four Letter Words ....

What's this?!?.....

...... Expletive Deleted?

Haiku For You....

Sweet!

Just one syllable,

Closely whispered in the night,

Calling out for you.

From The Field...

"The recent change had been discussed many times and really shouldn't have come as a shook to anyone..."


(Guess it was a "Jerry Lee Lewis moment" for a few...)

Office Of The Chief Economist....

Marginal Cost? Opportunity Cost? Sunk Cost?

UNNECESSARY COST....?

Another "robust"** forecast from the visionary leadership at...

.... are you listening?!!?

** Definition:  "Robust" - written by an idiot.

The Great And All Powerful Oz....

Be sure to look behind the curtain...!!

"And Oz never gave nothing to the Tin Man that he didn't, didn't already have..."
    
    - America (1974)

(...nor has the NCUA.)


....are you listening?!!?

With Friends Like These, Who Needs........

Credit Union unity is a noble idea, but it's "a hard dog to keep under the porch."  


For those of y'all who don't understand the "hard dog..." phrase; you need to understand that most Southerners live in the country in houses and trailers set up on cinder blocks.  In a rural Southern setting, everyone and his brother keeps at least one dog, although a pack of three or four is generally preferred.  Let me assure you, that down here, the dogs of choice are not poodles, pomeranians, nor pekingese. Shepherds, rottweilers, pit bulls and dobermans are local favorites.  Repeat offenders with surly personalities are particularly prized.

Not the Southern dawg of choice..!!

A country dog is a working dog, providing household protection, crowd control, and clean-up services.  If an intruder should trespass on your property, you want your dogs up under the house taking care of business.  No one is brave enough, and few are dumb enough, to advance on a symphony of snarls leaping out from the darkness underneath a front porch.  It's not too difficult for one to imagine what those unseen throats have in mind.  This is one of those situations in life where what you don't see is what you get.  Highly excited dogs engaging a quarry "with permission" is a sight most people are unwilling to watch.  The thought of a starring role in such a spectacle will send most folks back down the driveway in a heartbeat....

From The Field....

"The change in policy has created a good deal of detention in the ranks..."


(Really good way to get staff buy-in is to "keep 'em after" if they object..."time-out" can also be effective...)

Star Wars....

May The Fourth Be With You...!!!!

New Product For Squeezed Margins! Guaranteed...

The Big Squeeze!

Bottom line feeling the pinch?  It's a really tough world out there right now; hard to make ends meet in a "double zero economy" - zero loan demand and zero returns on investments.  Sure doesn't leave much room to wiggle.... time to call in the marketeers for an answer!


The "go to" marketing firm in our area is Braggadocia & Spin. The partners, according to their very own brochure, are borderline creative geniuses with much experience in "revenue enhancement" (they don't say whose...!).  B&S was the firm which developed the catchy name "Fly-N-Food Mart" for a local convenience store which wanted to emphasize its quick service. The agency also solved the marketing riddle of how to advertise irregular hours for a local eatery, installing bright, flashing neon signs proclaiming:  "Open Occasionally"!  Another fast food innovation - "Munchin' Marvin's All You Can Eat Chitterlings" - is some of their work and the "Sumo Bungee Jump Festival" was also their idea.  Great "stuff", huh!


Want to guess what new product B&S proposed to grow non-interest income?

Are You "Listening" Part 3... ? - Efficient Market Theorists!

Magicians...with pointy hats!

"The reputation of economists, never high, has been a casualty of the global crisis.  Ever since the world's financial system teetered on the abyss ... critics have posed one uncomfortable but highly pertinent question:  "Are economists of any use at all"?"    (First five paragraphs excerpted from the Financial Times: "A Realm Dismal In Its Rituals Of Rigour" - 8/26/2011) 


"Economists complain that the critics do not understand what they really do.  But, if the critics did understand what economists really do, public criticism might be more severe yet."

Entirely "empirical"....!!

"The study of financial markets revolves around the "efficient market hypothesis" - that all available information is incorporated into market prices, so that these prices at all times reflect the best possible estimate of the underlying value of assets - and the "capital asset pricing model".  This latter notion asserts that what we see is the outcome of decisions made by a marketplace of rational players acting on the belief in efficient markets."


"The serious criticism of modern economics is not that its practitioners failed to anticipate the crisis, but that they failed to understand the mechanisms that had put the global economy at grave risk.  Economic systems are typically dynamic and non-linear.  This means that outcomes are likely to be very sensitive to small changes in the parameters that determine their evolution.  These systems are also reflexive, in the sense that beliefs about what will happen influence what does happen."

....a "proven record" of foresight!

"The belief that models are more than just useful tools and instead are capable of yielding comprehensive and universal descriptions of the world blinded proponents to realities that had been staring them in the face."


Credit unions are currently confronted by a regulatory regime which still believes in this "economic model theocracy" - so thoroughly, painfully and expensively discredited by recent events at the Corporates.  


And, our regulatory "cultists" - in the best tradition of Jim Jones, Kool-Aid drinking "true believers" - persist and compound their errors with new irrationality on interest rate risk, ALM model madness, concentration risk presumptuousness, participation pontifications, and a whole range of concocted, simplistic, and hallucinatory-verging "best practices."  


Pretty clear what our "Let Them Eat Cake " regulatory "listeners" are baking up for CUs in the future; another very costly serving of...