Wednesday, August 01, 2012

Off The Charts...

The NAFCU Annual Conference was held last week in Nashville.  NCUA Chairman Debbie Matz chose this important forum to present several new Agency initiatives designed to enhance its efforts to improve the CU industry.  The highlight of the speech was the announcement of the formation of a new NCUA department - the Office of National Examination and Supervision (ONES) - to oversee credit unions with assets in excess of $10 billion and the residual Corporates.

Using several charts, the Chairman pointed out that "fewer and fewer credit unions are holding more and more total assets" and "Right now, the credit union industry is becoming more concentrated.  The largest 5% of credit unions hold over 63% of all assets".

Chairman Matz went on to point out that "as you can see from the slide, the distribution of exam hours and risk is clearly out of balance.  When you look at this graph, you can see on the right that the credit unions holding a combined 63% of industry assets receive only 19% of NCUA exam hours.  On the left, credit unions holding only 7% of industry assets receive 46% of exam hours."

Ms. Matz went on to say about the creation of the ONES: "Because it's clear that we need to enhance supervision of the largest credit unions, effective January 1, 2013, we will reorganize existing resources into a new office."  "The intent of these changes is simple, really.  We must put our resources where the risk is."

Simple?  Really?....

...Thought you might like to see a somewhat different "slide" being used internally at the NCUA:

The "missing data" not presented to the folks at the NAFCU meeting shows the actual 10-year historical  % of total losses incurred by the NCUSIF for each asset category.  

"...simple, really.  We need to put our resources where the risk is."

It's very, very hard for credit unions and the NCUA to - as Chairman Matz encourages - "Grow Together", when CU people - like the folks at NAFCU - get only half the story, half the truth, half the time....

(... and you still don't see any need for reform?)


Anonymous said...

MS Matz seems to deny the effects of statistical sampling on the management of risk. Don't credit union members support a highly paid Economist who should have given her a heads up about the effects of statistical sampling? More assets do not necessarily require increased observations to make conclusions about risk. Actually, NCUA chart seems to indicate that they are squandering member's money with excessive time spent in only several credit unions. The largest 5% of the credit unions only equal several hundred credit unions.

Wonder why the Chart Masters at NCUA did not provide other information like ROA, Capital/Asset Ratio, Loss ratios etc. in the different asset categories. Had NCUA identified significant negative trends in larger credit unions in vital areas indicating risk one might agree with Ms. Matz.

Lacking information concerning other charts created by NCUA's Crayola Crew to support the speech may change this conclusion. All this chart proves is a concentration of assets not risk.

Dennis Moriarity said...

Well you can't possibly disagree with how well it worked at the Corporates. I mean they headed off the really big problems by stationing permanent crews to oversight the risk. That worked peachy didn't it?????