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| Give 'ya 3 guesses.... ! |
WHO SAID THIS ??
"Capital Is King
Well-capitalized CUs can weather difficulties and protect the insurance fund."
"The lesson from the financial crisis for all financial institutions is that capital is king. It is the first line
of defense in protecting federal deposit insurance
funds..."
Chair Matz? (nope) Mr. Fryzel?(nope) The Faz?(nope) ...
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| Our Capital Leader... |
Nope, it was Bill Cheney the CEO of CUNA in the latest edition of Credit Union Magazine. Perhaps it just struck me wrong but the article, "Capital Is King", seemed to confirm for me a growing sense of unease that our folks in D.C. may no longer "get it". If anything, at best, credit union capital is the last line of defense for the NCUSIF - not the first ! And, it's not just a matter of semantics... the NCUSIF does not become impaired when a CU's capital reaches 9.99% now does it? nor 7.99%, nor 6.99%, nor 4.99%, nor 2.99%....
Hope it's very clear that the capital of your credit union belongs to the members of the credit union - and to no one else, including the NCUA. Bill's phrasing might lead one to believe otherwise. CU capital is retained to protect the members from unexpected adversities, the NCUA like any other insurer should be an "after thought", an additional level of support only if everything else fails - a last line of defense.
CUNA and its leadership should be a first line of defense against encroachment by a "no prior, real world management experience" deposit insurer. A deposit insurer which increasingly seems to believe that they are empowered to not only "first line" manage the capital of your CU, but are empowered to "first line" usurp both the democratically elected board and the cooperative owners themselves. Which might be O.K. if NCUA possessed "first line" management capabilities - which the track record would indicate they do not.
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"Increase safety and soundness?"
"No way !!" |
But do take time to read the article because it raises two other "first line" concerns for credit unions. First, the article is basically a positive pitch for supplemental capital, which sounds reasonable if a credit union needs to beef up its capital position (say to perhaps hedge against those counterparty derivatives losses!). But the real "first line"point of concern is that Mr. Cheney and Chair Matz have both written to Congress repeatedly asking to let CUs increase their capital levels - who, "first line, or last line", could argue with that? Evidently neither NCUA nor CUNA individually, nor both parties jointly have enough credibility with Congress to get a capital increase done. That fact, that reality should give us all great pause.
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Know where to look for
that biz loan priority? |
Lastly, for you "increase the biz loans cap" fans, it would appear once again that the musical chairs method of choosing CUNA's top legislative priorities has left you in the lurch; as Mr. Cheney now says the top 3 priorities are capital, taxation, and regulatory burden.
4 comments:
"Capital is King" only if you are a BANK!
Undivided Earnings in excess of amount reasonably considered necessary for potential contingencies is theft from members.
SECU always keeps Capital at a minimum. To Jim's credit he knowingly keeps Capital at a minimum and returns benefits of membership to the rightful owners of earnings who are his members.
Pretty strong wording there - "theft"?
How about if we mellow it out a bit and go with a reverse "Robin Hood" - a take from the people and give to the "robust" kinda thang...
Actually, it is currently exactly what the traditional mythical "Robin Hood" fought against: The "robust" taking from the people by a entrenched nobility. The nobility AKA NCUA and the Trades need to be denied their tribute extracted from defenseless members!
So if we busily gather enough capital will we be able to weather not only the Corporate fiasco but the "derivitive" authority about to be granted to a tiny minority of credit unions and the MBL's that have gone south and killed their credit unions?? I guess we are getting used to paying for other peoples mistakes and I am happy that our members can participate in these bail outs even if we are restricted by law and common sense from participating in the activity. Besides that it gives the same people responsible for the costly foolhardiness a reason to eventually get on the other side of it and contend they "are the guardians" and will be cleaning up the mess. Cheney belongs to NCUA he is their spokesman and a good one at that. Now if we can get him appointed to the Board we auto save 8 or 9 hundred grand...
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