Wednesday, June 20, 2012

New SPAM from NCUA - Fifth Course: "D-Liisted"

"Packed" by federal "inspectors"!
Chomp! Chomp! It's S-h-h-h-nack time again as we continue to look at the new NCUA SPAM maps announced with much 
festive claptrap on June 5th!

Cute and Colorful!
The second round in the "grand series" (actually it's about 2,000 "grand" ($$$$!) per year when "purchased" through this federal Agency) of NCUA SPAM maps features "key" lending data.

The Spin Cycle!

Think it only fair to note that when you get away from the "this just makes us wet our pants" type hype of the "Express"News Release "spun out" by the media mongrels at NCUA and look at the background information, you find this:

"In states with one or two very large CUs, the state average will reflect the performance of the largest CUs."

"State aggregate averages do not necessarily reflect the performance of individual CUs within the state."

Let's see, you can't tell much about individual CUs and you can't be sure about the states....


Which of course leads to the following perplexing question:

Q:  WHY BOTHER???......

Cute and colorful!
But, just for the sake of observation, let's take the loan delinquency NCUA SPAM map and randomly select a state to test the quality of the information.

Well, "RED" implies "bad" on this SPAM MAP and there are only two choices - Montana and North Carolina.  Flip a coin!  Wouldn't you just know it; as luck would have it, N.C. came up!

Is the exciting new NCUA SPAM map accurate or not?  "Course the disclaimer from the background information admits:  You can't tell "necessarily".  But, the breathless "spin doctors" at NCUA set-up the whole Agency to look foolish by failing to include those "minor sort of details"!

So, here are the accurate facts on NC delinquency. NCUA in its background data with the SPAM maps indicates that statewide delinquency in NC is 3.1% - pretty high!  Does one CU in the state "skew" the data?  Yep!... and that CU represents around 75% of the total assets in NC.  That  CU - we have redacted the name to protect them (Oops! well maybe we didn't but we sure didn't do it on purpose, really...) - reported around 3.62% delinquency on the March 2012 Call Reports - pretty high!

Using a little basic math we can back into an estimate of what the delinquency levels of the other NC CUs look like. The formula is: 3.62% + 3.62% + 3.62% + "X" /4 = 3.10% (the statewide average listed by NCUA).  The answer for "X" is 1.54% on average for the other CUs in NC, which of course certainly drops all the other CUs in NC out of the "RED".

But that's only half the game!!!  That "redacted" CU is one of those CUs which has been working religiously with its members to help them adjust their budgets, modify their loans, keep their homes, and survive this less than "great" recession.  Cu-Redact has also accurately adopted NCUA's insane, insensible, and indefensible TDR policy while continuing to complain strongly to NCUA's "hearing impaired" leadership.  Who - bless their hearts - finally "listened" and dumped the TDR garbage on May 24, 2012 - years late but who's counting? 

If you appropriately adjust "CU-R"s delinquency ratio to the correct delinquency reporting methodology used by all other federal financial regulators - and now reluctantly even by NCUA ; CUR's delinquency ratio drops from 3.62% to 1.69%!  So, now let's do that NC state average again - 1.69% + 1.69% + 1.69% + 1.54% /4 = 1.65%.  Low and behold NC is now magically cool blue!

Just confirms NCUA's Chief economist's observation that you really can't necessarily rely on anything coming out of the NCUA SPAM maps.  Certainly no one would think that NCUA would seek to intentionally mislead folks about NC .....

The NCUA SPAM question remains:  WHY BOTHER????.......

$MILE$ + $PAM = $4 Million!!!!
"Fun 'N Games"

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