Monday, July 30, 2012

Adding A New Wing On The House?

Swerving toward a disaster...?
Appears the deck chairs will once again be reshuffled over at the NCYA.  Evidently moving "the same old furniture" around a bit is considered "an act of creativity" by the higher ups in Alexandria....... 

The Agency on July 26, 2012 announced:  "We are reorganizing our existing resources" to create an Office of National Examinations and Supervision" ('da "ONES").  The "new" group will be responsible for the examination and supervision of credit unions with assets in excess of $10 billion and will also dump the surviving Corporates into the mix for logical consistency.  

Having the same "existing resources" which "helped out" with the Corporates focusing on them, must be terribly reassuring to those larger asset credit unions.  Same resources, same leadership, same expertise, same attitude, same people....same results?  Guess I would go with Einstein's answer to that question: "The definition of "insanity" is doing the same thing over and over, but expecting different results."

The NCYA Media Release announcing the change brims with absurdity, but using the Agency's own arguments that 1)"those with more than $1 billion in assets hold 47 percent of industry assets" and 2) larger CUs need more focus, "more attention where more of the industry's risk is held" then... there is one other positive alternative which must be permitted:

"All credit unions with $1 billion+ in assets shall be given a choice between deposit insurance coverage by the NCYA or the FDIC."

Clearly it's time to recognize the current limited expertise available at the NCYA and the greater existing expertise available at the FDIC.  Choice, particularly for state-chartered CU's, could 1) simplify the federal interface with the CFPB;  2) reduce the risk to all CU's from the Corporate exposure; 3) reduce the cost of overall NCYA regulation to smaller CU's; and 4) enable NCYA to refocus its efforts on preserving, enhancing, and re-energizing smaller CU's - where the NCYA's existing expertise lies. 


Before we....   

.... add another wing on the house.

(... whether you call it reform or "renovation", the first step is to check the soundness of the "foundation".)

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