Thursday, February 14, 2013

Falling Short At NCUA

Well, hope by now you have read the OIG letter to Congressman Issa concerning those $42 million in "contingent" legal fees paid out by NCUA under "less than clear" circumstances.  

OIG is no NCIS !!

Kinda know you're likely to find some dirt if you dig into a hole filled with both DC and Chicago "politics". Don't take my word on it ask Blagojevich !  Guess the other thing that is painfully clear from the letter is that Mr. DeSarno from OIG is no Jethro Gibbs from NCIS!  As to those OIG "conclusions":  Oversight? Overlooked? Overripe? Overt? (or OMG!... "these are the conclusions upon which our facts were based.") 

John Kay writes for The Financial Times.  He had an interesting opinion piece (2/06/2012) on fiduciary responsibility and the financial industry recently. Here's an excerpt:

"Fiduciary standards describe how people should behave when they manage the affairs of others.  The key elements of the concept are loyalty - put your responsibilities to others ahead of your own interests - and prudence - discharge your responsibilities with care and skill.  Conformity to fiduciary standards also means avoiding conflicts of interest.  If conflicts of interest cannot be avoided, they should be disclosed."

Seemingly pretty standard stuff - right?  But here is John Kay's punchline and the concern you should have over the OIG letter and several of its conclusions:
Tell them to eat it....

"The reputation of finance has been degraded by the actions of a few.  But the few have been running the show, and have imposed inappropriate values on once respected institutions."

..... it would appear that "the few" at NCUA have lost sight of their duty of loyalty, their duty of prudence.  

We'll take a look tomorrow at where NCUA is falling short - well short - of their responsibilities.   And, why your reputation, your respected institution is at stake.

But here's a little "appetizer" about how well OIG does its' homework. From the Issa letter:  

"The [FDIC] attorney we spoke with further declined to confirm or deny that it was FDIC's current policy to avoid contingency fee arrangements."

And, here's what the Wall Street Journal (10/26/2012) said in its article:  

"The Federal Deposit Insurance Corp. generally avoids contingency fee arrangements, an FDIC spokesman said."

SOMEBODY IS FIBBING !!! (Don't think it's the FDIC, do you?)

Hope you get the whiff  drift of a less than thorough, perhaps less than arms length opinion....

... unfortunately this is the mildest stench - stay tuned!

1 comment:

Dennis Moriarity said...

Your next blog should be titled “Falling short at Cuna”! Then the next Falling Short at ________ enter your own choice of Trade Assoc. First of all I am not angry, disappointed yes, but not angry. Got over that a long time ago. Also sorry for the late reply grandson's hockey game last night and I do prioritize. So you asked a question about what are the 1,2 or 3 things we must do to “right the ship”. Firstly let us recognize who we really are or have become. My opinion is we are is a bunch of entities with generally no ties to each other save a membership (not all) in a trade association that is supposed to represent us collectively to the world and carries our message to congressional representatives in attempting to create an atmosphere conducive to our business of helping members. In truth we are falling apart and the atmosphere is positively toxic.

Community Bankers are our enemies – Not. They are an enemy created by the Trades to make the (Trades) look like our champions protecting us from the bad bankers. In reality the morass of over-regulation and similar issues facing them will slim their numbers markedly. Would it not make sense to attempt to join forces at this stage of the game to mitigate the effects of this stuff? Are we afraid to even consider that. Liz Warren is a bad person – Not. She is a good person who is working hard to make sure consumers don’t get taken advantage of any more. CRI or CRA or C whatever is not something to be afraid of if you indeed are working hard to help in your community in whatever way possible and not overly concerned with getting lavish praise for it. MBL relief is our highest priority – Not. Only the very large credit unions might benefit from higher MBL authority but at what price? How many Telesis’s are there out there and Cuna’s own “white paper” describes the difficulties a smaller credit union will encounter if it just tries to meet the 12.25% current limit. However our Liability (NCUSIF) for the bad decisions remains at 100%. Buffalo is getting crowded as many Volunteers have been shuffled off. Shouldn’t this be kind of scary? We are supposedly a volunteer organization but of course the complexity of todays world demands a little more than just good intent.

So I think #1 is reforming CUNA and getting some people in there that carry a message that starts with “people helping people”. It’s got a nice ring.

Oh by the way the methodology is simple – withhold the dues and if your state trade assoc. says you can’t do that tell them its been nice knowing you. I’m sure all the dues money that flows into CUNA could go a long way to forming a nice National lobbying group that could be a lot more effective than what Credit Unions have now.

#2 to follow work to do.

p.s. Troy Sting 7 - Grosse Pte Bulldogs 3. Go Sting