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| "Call me IRR-esponsible... |
Ah, Frank sang about it so well....
The leadership at the "new" NCUA has, evidently, just recently discovered "the new world" of interest rate risk (IRR) management.
NCUA has become so excited about the "evidently-novel-to-them" concept of risk at a credit union that they've started to do some silly stuff - like make up "SOS"* risk ratios! SIRRT is the latest and greatest example of "risky" thinking at the Agency. * ("SOS" - "Stuck On Stupid")
Haven't heard about SIRRT yet? Well get
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| Ratio Rant !! |
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| Sandbox IRR Threshold !! |
What's the problem with SIRRT ? Three things...
1) It's a robustly blunt risk analysis tool which doesn't differentiate the degree of risk in either the mortgages nor the investments. There is a great deal of difference between a 10 year T-bill and a 5 year Cyprus bond; between a 30 year subprime mortgage and a 15 year 30% LTV mortgage... ad infinitum.
Just "SOS"* crazy ! (* "SOS" - "Stuck On Stupid")
2) Senior NCUA field examiners are already
showing state level SIRRT rankings and encouraging credit unions to lower their SIRRT risk profile. The SIRRT ratio is appearing as a DOR write-up in individual CU exams. Most amazingly Sr. examiners are actually standing up before CU audiences and saying they have no idea what the ratio means! Why is a score of "100" the supervisory threshold? How was that determined to be "good"? What's bad? who made that decision? Has that decision been validated? When/by whom? "Dunno says the examiner; that's not my call."
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| Sr. examiner... outstanding in his field. |
Just "SOS"* crazy ! (*"SOS" - "Stuck On Stupid")
3) SIRRT is a Seriously, Silly IRResponsible Threat to every credit union which must - in the real world - prove its risk management skills each and every day. Why? Because real world credit unions are being measured by NCUA folks who are not being held accountable nor answerable for their very public foolishness.
Just "SOS"* crazy ! (*"SOS" - "Stuck On Stupid")
ASK YOUR NCUA GURU TO EXPLAIN SIRRT TO YOU...
ESPECIALLY ASK WHO'S BRIGHT IDEA IT IS ! 
4 comments:
SOS! SOS! SOS! This is not a predictive tool or an indicator of interest rate risk. NCUA might as well examine animal entrails or tea leaves. NCUA is SOS and their examination team is nothing more than a confederacy of deceivers.
Errrr. so what are all the CUs to do? Is CUNA on this? Nascus? hahahaha! Can we band together and get our own organization that lobbys on behalf of Credit Unions?!!
Let's all go be banks, end the pain faster instead of this slooooow torturous death
tSIroRReT.....Ok we got a couple of hearings coming up and need some neat sounding terms to confuse and make it look like we are on top of everything anybody got any ideas? Remember we can't afford any more TDR debacles. Dont forget its got to be tough to decipher not just any old acronym will do they are watching us too closely. Dont forget RISK is the most important word in our vocabulary. RISK makes people feel good about us and allows us to sound pompous and important in the face of the damn OIG revelations. Theres a group we can do without. I gave you a little teach at the start work with it, own it and try to get the field staff on our page. I know thats sometimes the hardest thing but get those hands dirty...One last thing. Lets not lose sight that FASB is about to rewrite ALL guidelines. We got to get there quicker than what we are doing now. Remember they have no operationally skilled people over there, just like us, but they are kicking our a-- when it comes to writing rules so lets step it up.
IRRational also.
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