Sunday, November 30, 2014

From The Field: Call Of The Child...

Face Time!!

"One fantastic professional advantage of having an infant is the built in alarm clock."

"... unfortunately he goes off at 3:00 a.m.!"

Saturday, November 29, 2014

From The Field: Gone With The Wind...

"The answer my friend is..."
- B. Dylan

"Now that the cotton is gone from the fields, the ATM receipts that our members drop on the ground really look bad blowing everywhere."

... not sure I get the cotton connection !?!

But as Rhett Butler said: "Frankly my dear..."
("Tomorrow is another day.")

Friday, November 28, 2014

Welcome To First Whineancial... (2015 Ad Campaign #5)...


"You can't do worse than First®!"


Your Hometown Boink
"Where We Come First®"

We're always interested in hearing from our customers!

So, our new listening service is called 
"A Penny For Your Thoughts"

Sign up today for this new low cost service ! 

Yes, at First® we still ...

The End Of An Era....."Oh, Please" ???

NCUA RBC experts:
"Big hat, no cattle"
As credit unions prepare for yet another head-on collision with NCUA's much-ridiculed, risk-based capital (RBC) "experts", it might be hopeful to take note of a recent U.S. District Court decision concerning disparate impact, which is unintentional discrimination by lenders against minorities and others.  

The decision was rendered by Judge Richard Leon in the District of Columbia, right there in the backyard of the U.S. Supreme Court. The case was a challenge to the pursuit of disparate impact claims against lenders under the Fair Housing Act (FHA). The judge basically said that the FHA covered only intentional discrimination and not unintentional discrimination, which certainly rings true in terms of fairness and common sense. Regardless of your politics, the concept of disparate impact is the slipperiest of slippery slopes in terms of legal ethics.

But what the Court said about the federal government's case (HUD was the agency) was of greater note: "Another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction."  You will unfortunately see another agency, dearer to your heart, cross-validate Judge Leon's statement in January.  Wonder if credit unions have considered and planned for that eventuality?

When the government contested his right to even consider the matter since the courts should defer to the wisdom of administrative agencies, Judge Leon gave a very precise two-word reply to express - appropriately - his disdain.

He simple said...

Thursday, November 27, 2014

Welcome To First Whineancial ... (2015 Ad Campaign #4)...


"You can't do worse than First®!"


Your Hometown Boink
"Where We Come First®"

Wishing you a Happy Thanksgiving!!

At this time of year, remember: 

"It's more blessed to give than receive."

That's why First®, on behalf of our investors and bonus-baby CEO, would like to say to each of our customers...

Wednesday, November 26, 2014

Welcome To First Whineancial... (2015 Ad Campaign #3)...


"You can't do worse than First®!"


Your Hometown Boink
"Where We Come First®"

Little late on your car payment this month?  

Don't worry, we won't hesitate to come right out...

The Rule Of Law....


"Banking means never having to say you're sorry."
- from Love Story ( the movie, 1970)

Tuesday, November 25, 2014

Welcome To First Whineancial.... (2015 Ad Campaign #2)


"You can't do worse than First®!"


Your Hometown Boink
"Where We Come First®"

We have convenient branches everywhere...

An "Independent" Federal Agency...

Say Amen!

"A man's* worst difficulties begin when he is able to do as he likes."

- Thomas Huxley

* also applies to women and "independent" federal agencies.

Monday, November 24, 2014

Welcome To First Whineancial... (2015 Ad Campaign #1)...


"You can't do worse than First®!"


Your Hometown Boink
"Where We Come First®"

With low rates on savings and lollipops for the kids,
we serve a lot of...

On Regulatory Capture...

Ms. Gretchen Morgenson is a much heralded, business columnist for the New York Times.  In her writing, she generally "tells it like it is" and doesn't suffer fools - or foolishness - very lightly.

Her Sunday column (Nov. 23, 2014) was about "regulatory capture"; a topic made infamous last week when the NCUA manufactured "that threat" as their excuse for using an old KBG playbook to run the Agency (Here are Chair Matz' video remarks at CUTimes - take a look for yourself). 

Of course, Ms. Morgensen was writing about the Fed, not the NCUA.  The New York Fed has come under sharp criticism for being too close to the major Wall Street banks - i.e., regulatory capture. Three short paragraphs 1) stated the core problem, 2) suggested a solution, and 3) outlined why the change was necessary.

1) CORE PROBLEM: "The Federal Reserve Board prefers to operate in a shroud of secrecy, and its officials really don't like having to answer to anybody."

2)  SOLUTION:  "Investors would benefit from greater disclosures by the Fed... The Fed, for example, reveals only final results of its "stress tests" that measure banks' health.  If you required it to disclose those models, you would facilitate cross-bank comparisons ... You'd also create incentives for the banks to disclose more and more about their own models."

3) AND, WHY...:  "There is another benefit to increasing transparency at the Fed.  It would be a singularly powerful force against regulatory capture."

Think the NCUA will take this opportunity to be creative, lead the way, set a new standard of professional regulatory excellence....

Saturday, November 22, 2014

Executive Decision-Making...

H-M-M-M.... let's see???

"My mind has not as yet reached a majority on that question..."

Friday, November 21, 2014

About The 2015 NCUA Budget...

No Cuts!
Well, in the federal regulatory, "Catch-22" world in which we all now exist, it is time for credit unions to study and comment upon the 2015 NCUA Budget, after that self-same budget has already been approved by the NCUA Board. That process, that logic, that obtuseness seems to make great sense on Duke Street, Alexandria.  In other parts of the Country, it's called arrogance ("Let them eat cake!" - Marie Antionette).

No comments!
But, since we are all just getting a first look at the budget and the underlying numbers, believe it would be fair to look first to what the NCUA Chair says about the budget and the processes by which it was developed.  You can find Ms. Matz' narrative on the 2015 NCUA Budget at under "About NCUA", 2015 Budget Documents. Read it and weep.

No clue!
Would suggest that of the many "unusual" comments and "twisted" explanations which are put forth as justification of the 2015 NCUA budget, the following logical disconnect between Duke Street Fantasyland and the real world says it all:

"Cutting the budget, however, is not an option.  Like all businesses, this Agency faces non-discretionary costs that tend to increase each year, such as:

                         *  Health care;
                         *  Travel and hotels;
                         *  Telecommunications;
                         *  Leased and owned property;
                         *  Hardware and software; and
                         *  Maintenance and repairs.

So the only way to materially cut the budget would be to substantially cut staff."

- Chair Debbie Matz 
On the 2015 NCUA budget
November 20, 2015

Yep, that certainly sums up pretty well all the very difficult choices that many credit unions - "like all businesses" - have had to make over the last five years.  Most of us didn't realize that looking at cuts in healthcare, travel, telecom, maintenance, and staff were "non-discretionary". Not sure how credit unions go about correcting this sort of statement of financial, fiscal insanity, but perhaps there is hope in that there was one dissenting budget vote on the Board.

But for now, we must all evidently accept the embarrassment of a federal financial Agency budget in which the Agency tries to have its...

Thursday, November 20, 2014

Ground Oink Day... Here We Go Again...



(November 13, 2014)

"Six major banks were fined more than $4 billion as regulators punished them for their role in a foreign exchange rate-rigging scandal that once again called into question the integrity of the global financial markets."

"The fines took the total issued by U.S. regulators this year to $56.5 billion..."

"... called into question..."???

Common criminals
caught red-handed.

The banks are "once again" dishonest...


(Hey, Keith Leggett - @ - would you consider this a "material event" or just a "typical event"?)

Wednesday, November 19, 2014

Q: How Many Economists Does It Take To Crayola A Graph?

Wanna save $1.5 million in next year's Agency budget?  Then simply replace this:


... specializing in "new initiatives"!!

(...which is good 'cause "old initiatives" are, ya' know, just "so quaint"... so to speak!)

... with this: 

Monday, November 17, 2014

It's Budget Time Again! Wink! Wink! The NCUA Overhead Transfer Rate....

Something Stinks
on the Potomac!
We have a little conflict of interest problem within the Credit Union movement.  It involves the NCUA, the NCUSIF, and something affectionately known as “ the overheard transfer rate ”(OTR).

As all of you know, federally insured credit unions commit 1% of their member deposits with the National Credit Union Share Insurance Fund (NCUSIF) to provide for deposit insurance coverage for member accounts.  If your member deposits grow, then you send additional funds to the NCUSIF during the year. If your deposits decline, part of your funds are returned to you.  

The NCUSIF is a great concept, beneficial to the Credit Union system.  NCUA is charged with administering the NCUSIF, but the money – remember it’s a deposit – belongs to you. The NCUA, as a fiduciary, is charged with the responsibility of administering your funds ( remember it's not their money!) in a prudent, reasonable fashion.

Few credit unions are convinced that the NCUA is properly meeting its fiduciary responsibility with your NCUSIF money.  If pressed NCUA will even claim it has no fiduciary responsibility for the Fund, a fact seemingly made all too clear with the collapse of the corporate system.

Washington knows how to budget!
But not in a "balanced" fashion!
Much of the concern revolves around NCUA’s almost whimsical and definitely arbitrary use of the earnings on your NCUSIF deposit to support an ever expanding Agency budget.  The fact that NCUA's budget grows year after year, even as the number of Credit Unions continues to plummet precipitously, defies the laws of economic gravity and financial prudence.

No one disputes that earnings from your NCUSIF deposits (now in excess of $10 billion) should be used to help manage the safety and soundness of the insurance fund.  But just "how and who" determines what percentage of NCUA examiner and administrative time is spent on regulatory matters and how much time is spent on insurance fund (it's currently 58%+) matters?

Saturday, November 15, 2014

Friday, November 14, 2014

Taking Bets.... On Second Thought.....(or Comment!)

Well, in fairness about that question....

Q:  What will the "new" risk-based capital (RBC) rule look like?

A:  There is a another possibility depending on the timing of the release of the "new" rule.  If the Agency tries to rush it through again, say before the end of November, then we might get another...

Thursday, November 13, 2014

Taking Bets....

Q:  What will the new risk-based capital (RBC) rule look like?

A:  Given NCUA's record of due diligence and transparency to date on RBC, would be willing to bet....

Monday, November 10, 2014

Let Joni Ernst "Down-Size" The Banks !!

Where is Joni Ernst when you really need her?

"The financial industry has largely lost the public trust."

- William Dudley
President, New York Federal Reserve

And, if the banks don't clean up their act....

... "your firms need to be dramatically downsized and simplified."

Sunday, November 09, 2014

Regulatory Waterboarding Of Main Street USA....

Chugging down the
regulatory brew.
"If Regulators and Congress miss the opportunity to lift unnecessary regulatory burdens, many more small banks [and credit unions!] will disappear.  The number of banks [and credit unions!] in the United States has sunk to its lowest level since The Great Depression."

"We have lost more than 3,000 small banks and more than 1/2 of credit unions since 1990.  In fact,  85% of banks [and credit unions!] with less than $100 million in assets disappeared between 1985 and 2013.  

Not only is the Nation losing small banks [and credit unions!], our regulatory framework is discouraging the creation of new ones.  

A frank discussion about what regulatory burdens mean for financial institutions and the communities they serve is long overdue."

- Senator Mike Crapo
Senate Banking Committee Ranking Member

Friends, this is what a "second comment period" 
needs to be about!

Friday, November 07, 2014

Send Them Some Sugar ....

They could be barking
up the wrong Forrest!

Haven't seen any commitment yet from the NCUA to hold additional listening sessions in conjunction with the second RBC comment period.  

One would think that more input from credit unions would be critical, especially when the second comment period was granted because there will be "significant structural changes".

Here's what Chair Matz said in the press release (9/29/2014):  

"I have always said that another comment period would only be appropriate if we decide to make significant structural changes that would exceed the parameters of the Administrative Procedures Act [APA]."

"Based on discussions with NCUA's General Counsel I now believe it is prudent under the APA to ask for additional comments." 

Clearly NCUA staff can use all the help they can get to avoid a repeat of "the recent unpleasantness", resulting from RBC round one!

While credit unions wait to see if we're asked to actually participate, you could help out by sending the NCUA folks some more of the source material from which they apparently choose their "best" ideas....

Thursday, November 06, 2014

Shun Gump Shun !!....

Key to the future?
Got to thinking about NCUA's reliance on Forrest Gump as its current, authoritative source for key future planning at the Agency. (See post; "Outside The Box Thinking" - 10/23/2014)

To refresh your memory the key statements from the October, 2014 NCUA newsletter were:  

Q:  "How will changes in the financial marketplace alter the regulatory tools and skill sets required to fulfill our statutory mandate to protect the system?"

A: "It's time to start asking, "What would Forrest Gump do?""

Can it really be true that the NCUA Board, the gnomadic robusterians, the hilarious economissedits, and other assorted busy beavers at the Agency are really looking to Forrest Gump for the key to a balanced RBC; the key to a more collaborative relationship with state regulators; the key to a more credit union inclusive rule-making environment; and the key toward greater respect for the Agency on Capitol Hill?

Somehow I don't get it; I just can't see the...

Wednesday, November 05, 2014

What Are Friends for?....

OMG !!
Should never have done those blogs on how much I appreciate "leadership books" (9/8/2014, 9/25/2014).  Some folks evidently are simply hardcore, literal literalists and believe everything they read on the internet! A worldview, a belief system built upon the twitterings of anonymice?

Sure 'nuf, in came another one from "a friend":  "From Values To Action" written by Harry Jansen Kraemer, Jr. who was a former CEO at Baxter International and now is a prof at Kellogg over at Northwestern.  Mr. Kraemer has got "it" (leadership) down to just four things:

1. Self-Reflection - what matters, what you stand for.
2. Balance and Perspective -  see different points of view.
3. True Self-Confidence - being comfortable in your skin.
4. Genuine Humility - respect for others.

Pretty good list, right?  The other very positive thing about this book is that a great professor will always give the student a syllabus which "summarizes the course". Mr. Kraemer provides a truly outstanding syllabus of the book in the 8-page introduction. Read that and skip the rest; use the time you save on something more productive, like sampling craft beers around town in downtown Asheville, North Carolina.

The book states:  "At first glance, the four principles of values-based leadership seem simplistic." (Yes they do!) However, they are not simple to implement." (Yes, they are!)

Simple to implement?  Absolutely!  In fact, Mr. Kraemer gives us the simple implementation plan when he says... "in a crisis [or for that matter, any normal] situation, when confronted with this question:  "What are we going to do?"  In a values-based organization the answer should always be:  "Do the right thing."  Sounds pretty simple to me (and vaguely familiar!); what's so difficult about that?

By the way if you want to take your effective leadership list from four items to just one, the Greek oracle at Delphi continues to have the one best answer after 5,000 years....

Election 2014


Tuesday, November 04, 2014

A Robust, 100%-Agreed Interest Rate Forecast....

Regress this !!!
Well, as we saw yesterday in the case of Fortress Capital, mis-analyzing the direction of interest rate movements can be very costly - off 9% - to private sector investment professionals and their clients. How could such an investor miss the yearlong decline in interest rates so badly? To whom were they listening???  
Here's a hint from the Financial Times (10/19/2014)....

"As the year began, the Federal Reserve had announced the beginning of its programme to taper off its purchases of government and mortgage backed bonds, known as quantitative easing.  These purchases were intended to stimulate the U.S. economy by keeping bond yields low.  Removing the stimulus, as the Fed did steadily throughout the year, was expected to raise yields."  

"No fewer than 97% of economists surveyed by Bloomberg in January expected interest rates to rise over the next six months.  By April, this figure rose to 100%.  Instead, the yields fell steadily all year until this week, when the fall turned into a rout."  -  John Authers

A 100% false positive, economic forecast by a group of some of America's most robust "econo-missed-its"!  Despite the fact that all inerrant, quantitative gnomes assert: "The numbers never lie!" 

Wait a minute, if the numbers are right, who's wrong?

Monday, November 03, 2014

Interest Rate Risk (IRR): Investing In The Future...

A little blurb of enlightenment from a recent (10/30/2014) WSJ article:  "Bad Bets Batter Manager's Fortress".

"The $3 billion Fortress Macro Fund, which Mr. Michael Novogratz [his friends call him Novo!] launched in 2002, has lost more than 9% so far this year, with half of that drop coming this month."

"Mr. Novogratz's main fund is among those that expected Treasury prices to slump this year, as the economy firmed and investors anticipated higher rates.  Instead, prices have climbed [and T-Bill yields have declined!]"

"We got run over," Mr. Novogratz said.

Pretty bad when a sophisticated investor gets "run over" in the market, in the real world where you do pay a severe price for "getting it wrong" (not like the Duke St./Disneyland fantasy fiction, where no one is accountable!).

Wonder who Novo's been getting his advice from on interest rates this year?  You don't think there's any chance it was from....

Sunday, November 02, 2014

On Cyber-Security...



... welcome to the 21st Century!!!

Saturday, November 01, 2014