Well, according to the NCUA Board
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| Unanimous in our full understanding of derivatives... |
You should recall, although the NCUA continually forgets, that the NCUSIF belongs to credit unions and is funded by credit unions. That's why its called the National Credit Union Share Insurance Fund, not Pooh Bear's "Honey Pot".
The new risks added to your credit union come as a result of the Board's decision to permit large credit unions to trade in derivatives - a reversal of the current, long-held prohibition. What does permitting such an increase in the overall risks to the NCUSIF mean? It simply means that as the principal funder of the deposit insurance pool your risks and those of your members have just increased, also.
How so?....
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| "Years of careful analysis... In the May 16, 2013 Bulletin, you'll find the following justification by the NCUA Board: |
1) Permitting derivatives trading by large credit unions (> $250 million assets) is "part of its [NCUA] strategy for helping credit unions manage interest rate risk..."
(Interestingly, can find no one who has ever seen a copy of that "NCUA strategy". Do you have a copy?)
2) "... the Agency's action comes after years of careful analysis and several advance notices of proposed rule-making..."
( Again, haven't been able to find any written summary of the results of "those years of careful analysis" or who conducted the analysis, nor how the findings were validated. Do you have a copy?)
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| "It's really not all that different than the Corporates... !" |
(Although an admirer of the NCUA Board, not yet convinced of its fluency with derivatives. Has a copy of the criteria under which that "careful evaluation" by the NCUA Board was conducted been made available to the owners of the NCUSIF?)
4) "NCUA has been evaluating pilot programs for limited derivatives use since 1999."
(Have the results of those pilots [ there were only 8 pilots according to the Feb. 3, 2013 Federal Register; 6 of which were through "third party programs" - the provider of which was limited to only one vendor by the NCUA ("very curious"!)] been distributed so that the owners of the NCUSIF can evaluate independently the outcomes?)
... So how does the proposed derivatives rule increase the risk of loss to your credit union and your members?
Well, the facts are we really don't have a clue do we? And, yet we are asked to comment !
Don't you think you should ask some questions?
3 comments:
Maybe a little required reading for the NCUA Board (of 2); "The Big Short" by Micheal Lewis and "Reckless Endangerment" by Gretchen Morgenson. They could read both on the flight to the next CUNA conference...
so where do we aask a question? and who will hear it and who will answer? No one. It's a secret. Poor ignorant lovers of order, reason and math--simple arithmetic--could not be allowed to question the rulers at ncua. and certainly are not entitled to any reasonable explanations because there are not any. not one. It's all whim and chaos. and no expertise and bullying and dictating. so they actually have information on a pilot program. must have been pretty horrible results or they have released all the info in abig press push.
Can't you put in a Freedom of Information Act request? But you would have to trust the source. Which is only as far as I can throw them.
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