Happy Pnew Year...

North Carolina's answer to
Times Square...

Know many of you have been waiting anxiously for the results of PETA's appeal of the only-in-North Carolina festivities at the Annual Possum Drop in Brasstown, N.C. (see post of 9/27/2013).

Logan, at right.

Well, the verdict is in and the possum will drop.   Clay Logan, the host of the event, said: "We've got the permit right and now we're legal. We're going to have to start looking for a possum."

"Dogs chase the possum up a tree and we either shake it down, or if it gets up too high, climb up after it." (Got that?)

But the possum didn't come without some strings attached. Judge Baddour and the Wildlife Commission required  "upon capture the possum must be evaluated by a licensed veterinarian and its diet should mimic that of a wild possum." Mr. Logan said he would feed it "apples, oranges, and cat food, among other things." ("… among other things" sounds like the only thing a wild possum would regularly eat from that list!)

The Possum Inn...

The Judge also said that the possum "must be kept in a box 6 feet long, 3 feet wide, and 3 feet tall, which must be properly ventilated and cleaned regularly."  "That's  a motel mansion for a possum," Mr Logan said.

And, Clay Logan really summed up this entire situation well when he said….

From The Field...

Hick-up ??

"There was a hick-up in our processing procedure..."

(…. a rural "ruby-throat" running wild 
in the credit union!)

A New Light...

... a new window on the world.

... MERRY CHRISTMAS !!

Time of Your Life...

" Use the good silver."

(Yes, what are you waiting for…?)

Wild Times!

STRESS FULL ??

"We had a recent visit from our Feral Credit Union regulator…"

(Bunch of Smart Alex-andrians?)

Know It All...

Got it?

"Those who think they know it all are always extremely irritating to those of us who really do."

(..don't you robustly* agree!)

*robustly - english adverb, used frequently in officious circles; meaning:"written by an idiot"; synonyms foolish, silly.

"To QM or Non-QM?".... That Is The Question!

QM - Non-QM !!
Mirrors or Mindgames?

Even Machiavelli would be intrigued by the Byzantine political furor unfolding around the CFPB and consumer mortgages.  As Wonderland Alice once exclaimed:  "Things just get curiouser and curiouser!" 

Jabberwocky certainly abounds!




Dressing up a pig?

In case you came in late, there are "a few new rules" on how to make a mortgage, which go into effect in January.  The core, "cut-to-the-heart-of-the-matter"
 change involves when a mortgage is fair and prudential and when perhaps it is not.  The basic test of prudence and fairness now seems to be "well-underwritten with a borrower debt-to-income ratio of < 43%" - or a "qualified mortgage".  Imprudence and perhaps disparate impact begin to threaten when that QM is "well-underwritten but carries a borrower debt-to-income ratio of > 43%" - or a "non-qualified mortgage".

All revolves around a very sound idea in any lending which is the concept of a borrower's "ability to repay".  Most of us, who have been around awhile, do not find determining if a borrower can reasonably repay the loan to be a novel idea!  But this is evidently a new era; one in which common sense is not that common and therefore must, of course, be legislated.

Off with your non-QM !!!!

Making a loan which the borrow can not repay  results from either simple negligence or purposeful fraud.  It will be interesting to see if either can be legislated out of existence. 

Personally, .... 

'Tis The Season...

Giving a community service
 "shout out" through cupped hands...

Been noticing lately all the little "do good" stories 
covering credit union community service?   - ribbon cuttings, naming rights, "big checks" everywhere !!   

And on top of that:  "CEO talks (most likely at great length!) with local boy scout troop about spotted owl"; "Credit Union Board Chair attends elegant, black-tie gala for homeless (at Ritz)"; "5,000 credit union directors attend (three week) Montego Bay conference on affordable housing"; "credit union foundations (after granting year-end bonuses) re-set annual fundraising goals"!  

Great to read that credit unions have finally decided - after all these years - to start getting involved with helping others ….

We're into everything !!

Even NCUA has jumped on the bandwagon.  Everybody wants to be seen as "doing something".  In NCUA's case, that "something" is usually - unnecessarily - bothering people who do. 

(Read it again slowly, it'll come to you….)

From The Field...

About that complaint...

"I am quite sure I came across to the caller as a little crazy and high strung (although I prefer to use the word passionate) ....

(... true passion is always foregiveable - please proceed!)

The Times They Are A Changin...

Mr. Bill Cheney
CEO, CUNA

"Cometh the hour, cometh the man?"

A Wise Word...

Usury?
In Banking:  It's "us-'r-y(ou)" !

"Usury is Murder."

- Hebrew proverb

Wall St. Banking:

In the choice between "us-or-you",

We always pick us!

From The Field...



" Our lead FSR will be going on maternity leave this month due to excessive swelling."

(Was this a surprise?  Isn't that what maternity is all about...???)

Heading Over The Edge With Derivatives...

Taking the plunge...

With the full, complicit encouragement of the NCUA:

Credit unions will shortly join the "big boys" - Wall St. dealers and traders - in the derivatives market. Vying to outwit the best and brightest, who have promised to help credit unions, while also serving as their "investment" counterparties!  Should be a thrilling ride!

Just for the record, thought you might like to take a look at the current derivatives exposures of America's four largest banks...

The Proposal On Stress Testing Credit Unions....

AS TO THE PROPOSAL:

... can't stress this enough !!

Let me have this year's Nobel Laureate in Economics, Lars Peter Hansen of the University of Chicago, tell you why. Here's what he said in a recent NYTimes (11/17/2013) interview:

A True Man...

" I never gave anybody hell.  I just told them the truth and they thought it was hell."

            

- President Harry S. Truman

The Stock Market Above 16,000....

"November.  This is one of the peculiarly dangerous months in which to speculate in stocks.  The others are July, January, September, April, October, May, March, June, December, August, and February."

- Mark Twain

At Thanksgiving...

THANK YOU FOR:

"The food before us,
The friends beside us, 
And,(most especially)...

 The love between us."

                                        - Amen

Have TBTFs Become Titanic?...

"The Unsinkable Folly Bound"?

"ASSETS OF THE SIX LARGEST U.S. BANKS ARE UP BY 37% OVER FIVE YEARS AGO.  WHAT HAPPENED ?"

(* Source: R. Ilargi/SNL)

Here's the breakdown:

TOTAL ASSETS OF U.S. BANKS:  $14.4 trillion.

              THE TOP SIX BANKS:       67% of total assets.

                (JPM, BOA, CITI, GS, WF, MS)

              ALL THE OTHER BANKS:    33% of total assets.

                 ( The "other 6,934" U.S. banks.)

But, don't despair! The folks in D.C. are "looking into it"...

The Road To Damassachusetts?...

Renewal, Renaissance, Revival?

"The apostle Paul was a master communicator.  Paul was the right man in the right place at the right time.  He was well-prepared and well-educated for the task at hand.  And, although he used his oratorical skills; at the same time, he always arrived at the same, simple message."  

"Now Paul could have stood around all day and cursed the darkness.  But instead he decided to turn on the light.  In the same way we can wring our hands and talk about the state of affairs in our world all day long.  Or we can do something about it."

"Not only did Paul take action, but he also took the time to learn about the people he was speaking to.  That is because the way to change a culture is to invade it...."  - Greg Laurie

So, with the latest move, does the Credit Union Movement have a new, master communicator-apostle ready to...

Everyone Needs To Keep A Dog And A Couple of Economists...

Leggett and friend...
(... always best to hold
a poodle by the throat!)

Leggett is one of my favorite pets. Have always been partial to the underdog, but you know with poodles that sometimes becomes difficult. Poodles have had a long, persistent reputation for being frivolous and a bit silly. 

Well, right, Leggett is not much on diplomacy nor credit unions and surely can't write, but he is stubbornly loyal. One thing poodles do excel at is in knowing how to follow instructions and how to come when called.  That's a big asset in lots of circles! 

You can put an idea into Leggett's head and he'll yip away at it all night long.  Incessant barking in fact may be Leggett's raison d'être!  Poodles have never been bred to hunt nor for independence.   That's why there are no stray poodles; poodles are always a pet - kept up by someone.  Leggett's definitely that kind of poodle!

Someone recently asked me if Leggett was named after ABA Senior economist Keith Leggett?  Absolutely not; no way! I can't think of anything more cruel than naming a dog after an economist!

And, besides if I'd wanted to mark Leggett with "an economic slander", would have ...

Success...

J. Paw Kitty

Formula for success:

"Rise early, work hard, strike oil."

- J. Paul Getty

A Pittance....

"Poverty, of course, is no disgrace, but it is damned annoying."

                         - William Pitt


 

Getting Goosed...

Federal "hiss"-ation!

"The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing."

- Jean-Baptiste Colbert

(Credit unions are "hiss-exempt" cooperatives.)

Pliny the Younger On America's Banks....

Enough is an oxymoron! 

"Avarice has so seized upon mankind that their wealth seems rather to possess them than they to possess their wealth."

- Pliny the Younger, c. 110

Reform...

"Nothing so needs reforming, as other people's habits."

- Mark Twain

(Bring anything to mind?)

From The Field...

"Brain has been slower to progress on his modules than I had hoped."

(Brian needs to give this some thought...)

Dudley: "Do Right" !....

Becoming Fed up - finally?

William C. Dudley is the President of the Federal Reserve Bank of New York, a position considered to be the second most powerful within the Federal Reserve System.  Experienced, tactful, discreet, Mr. Dudley, as you might imagine, is measured and careful whenever publicly expressing his views on the American banking system.  His opinions matter, he is always "on the record".

Which makes his remarks last week before the Global Economic Forum in New York City of particular note.  Mr. Dudley's topic of choice was: "Ending Too Big To Fail".  Much was not new in Mr. Dudley's analysis of the on-going problem of TBTF U.S. banks, but what brought the house down was the following comment:

Fowl Language...

"We speak for people who matter..."

The American Bankers Association (ABA): "As to credit unions, all we can say is that, if they walk like a duck and act like a duck, then...."



The Federation Of Credit Unions :  "We fully agree with the ABA that...

Much Like Putting Lipstick On A Pig....

ABOUT BANKING:

"Mr. Mark Carney, governor of the Bank of England and other regulators across the world, are forced to deal with a sector [banking] that combines the most unattractive features of [1] the oil industry (well-paid jobs inflate the currency), [2] the nuclear industry (occasional blow-ups and meltdowns), and...

V-Day... The First Veterans

          "The Shot Heard 'Round The World."

North Bridge

 Concord, Massachusetts
April 19, 1775

Healthcare Reform...

www. healthcare .gov
Doing a website colonoscopy?

"I hope it's true when they say "laughter is the best medicine"... because that's about all I can afford right now."

From The Field...

"I am hopeful that our bio-retention pond drainage issues have dried up."

(A properly functioning dried up pond?)

You Auto Know Better...

Not too difficult to spot the political, legal, and regulatory storm closing fast on the indirect auto lending business. 

Blocked by Congress from directly regulating consumer auto sales and finance, the CFPB has decided to try and regulate the auto market indirectly. 

Credit unions, participating in indirect lending with auto dealers, are bullseye-dead center of the on-rushing threat. By its nature, indirect auto lending by credit unions has always been a reputational embarrassment waiting to happen.  Well, get ready for "happen"....!! 

Trades will be up against a wall....

Credit union trade associations, too, cannot avoid the upcoming debate on indirect auto lending.  The typical stand pat, try-to-please-all position on this issue just won't get it this time around. ("Indifferent", "not-on-the-ball" regulators might also consider their looming public and Congressional profile dilemma!)

Baby birds and tomcats?

There is nothing inherently wrong with dealer, captive, or indirect auto lending. All have their roles.  There is something wrong with credit unions which knowingly feed "baby bird" members to "tomcat" car dealers. 

What has inspired some credit union managers to confuse the limitless promise of credit unions with the limitless promises of car dealers?

5 More "Super-telesistic" Ideas For Lending....

All hands on deck!

Don't quit while you're ahead! Here are 5 "super-telesistic" opportunities to up yours lending:


1.  Purchase Loans from Out-of-State Lenders - Claim it's diversification and earn some great upfront fees, too! NCUA obsesses about "concentration risk" so you can really substantially reduce that risk by having a few bad loans in every state.

Can we help you?

2. Buy Asset-Backed Securities and Novel Derivatives - Innovation is the key to our future success and "synthetic" loans are the future.  Can't miss with this one; because the underlying assumptions are absolutely (and "robustly") empirical. The brokers and dealers just exude confidence; and they must know what they're doing, because Guccis, Rolexes, and gold chains ain't cheap! Last one I met got his start as a "sand states" real estate appraiser and his ancestors sold invisible ("synthetic") clothes to kings. And, now a special bonus, NCUA has endorsed all this based on its experience with regulating these practices at corporate Credit unions.  Can't miss with this! 

Only the best for you!

3.  Develop A Taste for Loan Participations -  The rates and terms are simply fantastic!  Most of these are just too good to be true.  An unbelievable opportunity for those excess funds and you can always be certain that you are buying the highest quality loans the seller has to offer.  You'd sell your best assets first wouldn't you?!  Go for it!

The Ultimate Personal Rejection...

Federally-subsidized affordable housing...

Thirty or so miles north of Raleigh is the small community of Butner, N.C. which is the home of a large, modern federal prison complex.  The prison is the source of many valuable jobs for the area and is also the home of many of the formerly rich, formerly prominent, and formerly innocent. 

"The rent is much, much
cheaper than NYC!"

Bernie Madoff is a resident, as was Jim Bakker, the ex-televangelist, Jon Hinckley, attempted assassin of President Regan, and Larry Flynt, former publisher of Penthouse magazine. It's a pretty - formerly - fast crowd!

Federal prison, of course, is a serious business. Nothing much funny about losing one's freedom due to a substantial personal failing - judicially confronted and publicly admonished.

But it's difficult not to smirk a bit at Jesse Jackson, Jr.'s unusual introduction to the most rigid and inflexible of governmental bureaucracies - the federal prison system....

From The Field....

Always warm and fuzzy !

"Melinda never complains about anything; she has a bright future with our credit union."

(Yes, that "talent" is very rare in our organization!) 

A Voice From The Past....

Noted the following quotation in the newsletter of the North Carolina Bankers Association (don't worry I read it in private, so nobody knows!) attributed to Mr. Neil Smith the late CEO of First Savings and Loan of Mebane (NC):

"There will always be the need for a small town thrift....

          unless we are regulated out of business."

 

 

A voice from the past:  First S&L of Mebane no longer exists.

 

If you replace the word "thrift" with the phrase

"credit union"...

Under House Arrest...

BSA! AML! CFPB! QRM! ALM! XYZ!....

Regulatory Assurance...

This stinks !!

Well, we're getting ready to have quite a mortgage mess on our hands come January, 2014.

Q:  What's the problem?

A:  Qualified mortgages (QMs) and non-qualified mortgages (NQMs).

Blame it on Dodd-Frank, CFPB, Elizabeth Warren, Countrywide, Standard&Poors, Fannie/Freddie, or "all of the above" - whatever - but, the recently approved QM/NQM rules are truly a "game-changer" in the world of mortgage lending.

A bit over-simplified but in theory, if a lender makes a QM, a strictly "by the book" mortgage, then the lender will be presumed to have made a prudent loan and will not be subject to suit if the borrower defaults.  Conversely, if the lender makes a NQM and the borrower defaults, then the lender is potentially liable to severe penalties, fines, and possible regulatory sanctions for making an "imprudent" loan!

Duh?

What would you do given those two choices? 
Safe harbor or confront the threat of "financial ambulance chasing" litigators? 

It would appear that lots of lenders view this as a classic "Hobson's Choice" and will choose to only make QMs come January, 2014.


That's bad news for the average American working man and woman; that's too bad for many minorities, the divorced single parent, and lots of young folks....

The Formula For Financial Services Reform: TBTF x 2 = ??...

A "Robust"* Equation:  "TBTF x 2 = ??"...

TBTF #1 !!

"Too Big To Fail" Boinks

...plus a....