Thursday, February 27, 2014

The Robust Swans Of NCUA...

Black is beautiful!
Nassim Nicholas Taleb, author of The Black Swan and Fooled By Randomness, is definitely in the highest tier of world class economists.  He is not only a distinguished scholar and university professor, but he has also been a highly successful, hands-on capital markets trader and writer of exceptional range and wit.  

"Would you like to make
 a deposit?"
If you don't believe that reading about how our markets and economies really work could be fun (and who in their right mind would!?), you should give The Black Swan a try.  How can you miss with chapters entitled:  "The Uncertainty of the Nerd", "The Speculator and the Prostitute", "How To Look for Bird Poop", and "How To Be Wrong With Infinite Precision".

Reading Taleb always reminds me of our "robusterian" capital markets "specialists" over at "The Agency".  Their latest effort on modeling the credit union world as they know it was captured in the recently released Risk-Based Capital Proposal.

Taleb's glossary in The Black Swan identifies the crux of the problem with the proposed risk-based capital rule…

Tuesday, February 25, 2014

Mike - The Headless Chicken

The three most beautiful states?
Your State, my State,
and Colorado...
Ever been to Fruita, Colorado? Put it on your bucket list! (Rocky Mountain High).  Just one more reason that it is past time to make a pilgrimage to The Rocky Mountain State….

Why Fruita?  Well, mainly for the looks that your friends and co-workers will give you when you tell them: "I'm heading out to Fruita, Colorado for a little "R&R"!  Their imaginations  will just run wild!  And, if you then let slip you're "heading" for the Mike The Headless Chicken Festival, it will be full "game-on" with the office tongue-waggers…  

"I don't remember
what happened."
Fruita is the former home of Mike the Headless Chicken's creator, local farmer Lloyd Olsen.  Seems that Lloyd went out one afternoon in 1945, to his chicken yard with an axe, to get the main course for his dinner, and instead created a sensation.  Lloyd's axe-aim on that day was imprecise; and although Mike the Chicken lost his head, there was enough brain stem and blood flow left to assure his survival!  Mike lived for 18 months, making Mr. Olsen a good bit of money, being featured in LIFE Magazine, and earning a memorial sculpture in greater downtown Fruita!

This year the Mike The Headless Chicken Festival (Check out the Festival !!) will be held on May 16-17, 2014. The Festival will include many events like disc golf, bike poker run, and of course a 5-K run.  Kinda like the idea of a 5-K where…

Sunday, February 23, 2014

The Persistent Question...

Why should it be so "dangerous"
to question the status quo?
"Life's most persistent and urgent question is, what are you doing for others?"

- Martin Luther King, Jr.

Saturday, February 22, 2014

From The Field: Hit or Mist...

Mist opportunity?

"We made the move to the new branch building at mid-month with few difficulties.  In the mist of the move…"

(Moving requires great planning and coordination. It should never be hit or mist....)

Friday, February 21, 2014


How do you feel about that?

"You can not shake hands with a clenched fist."

- Indira Gandhi

Thursday, February 20, 2014

From The Field: The Demise Of the Branch...

Maybe not quite so "out of fashion"
as some robust pundits surmise...
"Last month was really, really busy.  Seemed like every few minutes, I looked up and saw our teller lines getting longer and longer our lobby kept filling up with those members 'who don't come into the branches anymore.'"

(Branches are not the root problem of the member service challenge!)

Wednesday, February 19, 2014

Rants And Raves...

"It's peaceful in them thar hills…"
(Yeah - right!)

The latest update from Mitchell County:

*  "Congratulations Jimmy Carter, you are no longer the worst President ever."

*  "I would like to thank the boy who holds the door open for everyone after first lunch.  You are the only consistent thing in my life."

*  "Is there anyway we can send Justin Bieber back to Canada?"

*  "You can't turn on a T.V. because all you see is a bunch of legs.  We are not happy with that."

And this sessions all-time favorite…

Tuesday, February 18, 2014

From The Field: (s)NO(w) Way…. !!

N.C.'s OBX:
The Outer (Snow) Banks

"We closed the month with a flurry of activity…"

(… actually it was a flurry of inactivity!)

Monday, February 17, 2014

Mayberry On The Potomac?...

Deputy Barney Fife & Sheriff Andy Taylor
Mayberry, N.C.

If you are of a certain age, then you are familiar with "The Andy Griffith Show" - a TV classic which had a long run in the 1960's.  (Re-runs are abundant!)  Do any of y'all remember that show? 

Ron Howard, who is now a well known movie producer, was the child star "Opie" in the series!

Sheriff Andy Taylor (Griffith) and Deputy Barney Fife (Don Knotts) were the forces for law and order in the small fictional town of Mayberry, North Carolina (pretty closely modeled on Griffin's actual hometown of Mt. Airy, N.C.!)  

Most episodes dealt little with managing crime waves, "drive-bys", and gang violence (which had yet "to be invented" in rural N.C.) and more to do with the Sheriff's genial efforts to keep his volatile, hyper-nervous, prone to be "trigger-happy" deputy between the ditches!

The recurring theme was that Barney could be
An expired parking meter !!
counted upon to go off "half-cocked" under the simplest of pressures and was sure to suffer from a severely "swelled head" when "put in charge".  A little power and authority just seem to go to some folks head… (it's probably because they're "frustrated"!)

"I'll ask questions
Got me to wondering if some of Sheriff Taylor's tools for managing Barney might not be appropriate to help tamp down some of the recent, volatile, hyper-nervous regulatory activity we've seen coming out of Alexandria - "trigger happy" $1 million late report fines,  "frustrating"  home-based CUs, "half-cocked" stress testing, and a "swelled headed", IMCR (see 1/29/2014 post) "we are the deciders" risked-based capital proposal.
"Slow up now, Barney!"

The Sheriff's trick which worked best and appeared to assure "safety and soundness" in Mayberry was to…

Sunday, February 16, 2014

From The Field: Unloading Llamas...

Deck the halls with….
"Every year we participate in the Holiday Christmas Parade.  It's great fun.  The only downside is that it seems every year we get stuck behind something that poops.  Not pleasant to watch nor drive through!"  

"This year we were behind some llama "angels"…."

(You really don't want to hear the rest of this; you just think you do…)

Saturday, February 15, 2014

Take Heart ! Life...

" The great man is he that does not lose his child's heart."

- Mencius

(… believe that's probably gender neutral, too!)

Friday, February 14, 2014

Take Heart ! Valentines Day...

The arrow of our ways...

"Love is the triumph of imagination over intelligence."

- H.L. Mencken

(Imagine that...!)

Thursday, February 13, 2014

It's Mutual....

"We "fine"-ally
received your Call Report!"

Ted Knutson had an interesting, short blurb in the CU Journal on February13, 2014 ("Late Call Report Fines Start Next Quarter: Matz"). 

The "yack" was about the late filing by credit unions of 5300 Quarterly Call Reports. According to NCUA's latest edict over 1100 credit unions ( about 15% of all CUs) were "late filers" at September 30, 2013 and NCUA will begin fining (..."up to $1 million"...) tardy folks at March 31.

Thought there were three interesting omissions in Mr. Knutson's piece:

1)  How many credit unions filed late at December 31, 2013?  NCUA has that answer already and has even promised to publicly "name and shame" late filers going forward, so it can't be a secret! How many?

2) "FDIC had zero tardy reports from its banks for the same period".  What is the unstated message in that comment about a) the effectiveness of NCUA and b) the respect credit unions have for the Agency?  Is "late filing" the real problem or a symptom of something a little more serious?

And lastly...

Tuesday, February 11, 2014

Paying It Forward...

We're feeling "fine"!

Achtung! Achtung!

About those 5300 call report late fees:

"NCUA is imposing penalties solely to deter late filing.  Any funds collected will be remitted to the U.S. Treasury and will not be retained for NCUA use."   - NCUA Report (Jan/2014)

Is that second sentence meant to make everyone feel better?  Not sure why the NCUA has chosen to "make a contribution" to the federal government? Anybody know? Why not…

Monday, February 10, 2014

"All Natural" Credit Unions….???

Have an interesting opportunity in a few weeks to participate in a national gathering of cooperatives (Nope, bad guess it's not the GAC - same idea, different city!)One of the participants at the conference is George Siemon, the C-I-E-I-O (give it a moment, it will come to you!) of the national farmers (primarily dairyco-op, Organic Valley.  Very much looking forward to having the chance to meet him - definitely a legend in cooperative circles.

Organic Valley is an innovator in the "return to your roots" revolution called organic farming.  Beyond the "sounds cool" part, what is most impressive about Organic Valley is its pioneering efforts to create local food industry jobs, to save America's small family farms, and to solve the Gordian's knot problem of gaining access to a mega-national, commodity-based, food distribution network, not particularly operated nor priced to favor "the little man".  Won't go in to all that but Siemon and Organic Valley are certainly worth a Google.

Most amazingly, however, is that the organic producers have created a brand by:

1) defining carefully the meaning of "organic", 
2) adopting "the strictest standards in the world", 
3) working with the government to create a nationally recognized "Seal of Approval", and  
4) establishing monitoring systems to assure the integrity of the brand is maintained.

These organic farmers made it very clear that organic farming was different, something special, a higher level of commitment, with agreed upon limits and standards - a system of well-defined, explicitly-agreed, shared values. 

What's even more instructive is how these "dumb, old dirt farmers" have chosen to defend their brand against those who now try to infringe, "false promise", or "piggy-back" on their hard-earned, pristine image.  Take a look…

Sunday, February 09, 2014

Don't Dilly-Dalai...

Be proper !

"Learn the rules, so you know how to break them properly."

- Dalai Lama

Thursday, February 06, 2014

Where There's A Will, There Is A...

No tricks !!
"There's no trick to being a humorist when you have the whole federal government working for you."

- Will Rogers

Wednesday, February 05, 2014

Is The Past Prologue…?

The winds of change blew through the venerable savings and loan industry in the 1980's with category 5 hurricane force.

Deregulation, securitization, interstate banking, the rise of the GSEs, all came "onshore", buffeting the "It's a Wonderful Life" folks,  with a vengeance   

The S&L leaders of that time had to make some choices.  The choices were hard; the choices were unpleasant; but the choices were unavoidable ("inevitable"!).  The world had changed.  

"The way is was" would never again 
be "the way it is".

One can rightly argue over the list of alternatives the S&L industry had at the time; but in the common wisdom of the day, it seemed to come down to just three choices:

  1. Stand Pat - Do nothing!
  2. Double Down - Bet the ranch!
  3. Fold - Sellout or convert.
And of course the correct choice for the long-term viability of the S&L industry was, as we all now know….

Tuesday, February 04, 2014

Agent Of Change...

See you…?

"Be the change you want to see in the world."

- Mahatma Gandhi

Monday, February 03, 2014

Irrational (Robusterian*) Regulatory Risk…. IRR !

The NCUA Robusterians at work...
The NCUA seems to be claiming to credit unions and to the entire global financial community that NCUA's very own robusterians have discovered a new financial phenomenon called "interest rate risk" (IRR)! 

Which, in the same sense that Al Gore invented the internet, I guess could be true….

The importance of NCUA's discovery of interest rate risk can not be overemphasized; and, in fact, it has been overemphasized by NCUA Chair Debbie Matz in her latest pronouncements, in the recently released NCUA 2014 Strategic Plan (please try to contain your guffaws!), and in NCUA's  interest rate risk "water-boarding exercises" (we answer to no one!) during credit union exams on both coasts (and numerous points in between!)  

Since NCUA is so adept at IRR and is so obsessively concerned with the certainty of an imminent, rapid, financially destructive surge in market rates, let's take a quick look at how the Agency is protecting itself against that unassailable prediction of IRR hyperinflation….

Saturday, February 01, 2014

Modern Art….

"What grade were you in
when you painted this?"

"Art conceals technique."

- Ovid

(… and sometimes vice versa?)