Saturday, February 28, 2015

From the Field: Speaking Of Paris...

Say no more...!

"Our family just returned from a long anticipated trip to France!  As a non-speaking Francophone, I just can't say enough about Paris..."

Friday, February 27, 2015

NCUA Transparency And Outreach...

"The Office of the Comptroller of the Currency
Democracy in Action !!
has established advisory committees to provide perspective to the Agency on the challenges and needs of minority institutions and mutual savings associations.  

Hands up !!!  To Help !!
Each will have 10 members serving 2-year terms and will meet at least twice a year.  These two groups will replace similar groups established by the former OTS.  An announcement and solicitation for members will be published in the Federal Register." 

The OCC evidently sees value in listening to the perspectives of the folks they regulate, as did the now consolidated regulator, OTS.  The FDIC has had such industry advisory panels for many years, as has the newest regulator, CFPB.  
'Da FED !!
Even the august Federal Reserve Board frequently sets aside time to meet directly with and to listen to the opinions of regulated institutions and consumer groups from across the Country. 

These advisory panels are obviously important sources of information and insight for these major federal agencies in formulating public policy.

Here's the test question:  Can you name the members of the NCUA Credit Union Advisory Committee?

Breathless with

Take your time... I'll wait......

Can assure you that your first two guesses were wrong....

Monday, February 23, 2015

NCUA: Hot "Stuff"...???

Masters of the Universe ?
"To many, NCUA often operates under a pre-Copernican view* where the credit union community revolves around the Agency.  In reality the strength of the credit union community is founded upon and exists because of the diligent and dedicated work of the people who comprise the community itself, within an organizational structure where NCUA should serve a far more modest, distant and less obtrusive role."  
- Mr. Mark McWatters, NCUA Board - 2/19/2015

* Copernicus (1473-1543) advised the "know-it-all-bureaucrati" of his time that they erred in believing that the sun revolved the earth. "They", much like today, were not amused!

Unfortunately for America's 100 million credit union members,  Mr. McWatters' observations about a self-centric Agency may have arrived too late.  

When evaluating the right of credit union member-owners to have access to the results of CU stress tests (which are required to be published by banks!); take a listen to the dismissive contempt with which 100 million Americans are held by  NCUA senior management...

Sunday, February 22, 2015

Saturday, February 21, 2015

Finest Federal Credit Union...

New York's finest... !!
Noticed an announcement by the NCUA that the first new credit union charter for 2015 had been issued to Finest Federal Credit Union in New York.  

The new credit union will serve law enforcement officers in the NYC area. Sounds like a pretty solid group with which to work!  Hope it is successful.

If the Finest Federal CU is successful you can bet that someone will come up with a knick-name, abbreviation, or acronym by which to call the credit union.  A shorthand shortcut reference. 

It happened with folks like Boeing Employees Credit Union, which has evolved into BECU. And, to Pentagon FCU,which has over time become Pen Fed. Or Sacramento Air Force Employees FCU, which now is called SAFE.

Got to thinking about what the Finest Federal Credit Union may be called in the future; have you considered the possibilities?

Thursday, February 19, 2015

NCUA: "The Bureaucracy"?...

Never really been a big fan of Jack (former CEO of GE) Welch's style of leadership, but it's very difficult to argue with his track record of corporate success. 

After retiring, Mr. Welch ran a "business advice" column in BusinessWeek for several years.  Here's an excerpt from a classic (12/24/07) :

Q: "How do you take on the bureaucracy that damages so many organizations?"

A:  "Damages?  How about deadens?  That's a better word to describe what the bureaucracy does; it sucks the life out of a business.  It turns normal people, granted a smidgen of authority, into rules-bound technocrats and twists candid conversations about real issues into jargon-laden gobbledygook.  In short, the bureaucracy gums up the works. It's a competitiveness killer.

Q:  So why do people put up with it?  

A: Probably because the bureaucracy just seems like too big a monster for any one individual to slay.  And we'd agree, unless that individual happens to be the leader.  

After all, it is the leaders who set the tone for their organizations through the values they choose and the behaviors they demonstrate.  And ultimately, it is the internal leadership, and the leaders alone, who have the power to set things right.  All it takes is courage."

So!  Maybe, just maybe !!!!  There is hope that the leadership of "our little Federal bureaucracy" will have the courage to choose the right values, rather than just play partner in "2-1" politics ....

Wednesday, February 18, 2015

Another Sort Of Larry... Interest Rate Risk (IRR)

Be wary of a larry!
Mr. Larry Fazio in his testimony before Congress last week said the following:

"NCUA's focus on interest rate risk [IRR] management has been constant and pronounced for more than 15 years, as evidenced by a steady issuance of guidance to examiners and credit unions on asset-liability management. Since 2010, interest rate risk management has been a heightened focus for NCUA, and it is a primary supervisory focus for the agency again in 2015."

No one working around credit unions was surprised that IRR has been on NCUA's mind for quite a while, that's irrefutable.  No one should be surprised that IRR is a "primary supervisory focus" for 2015, a focus that most think now approaches irrationality.  

15 years
of IRR leadership.
But, what was a bit of a surprise was that Mr. Fazio and the NCUA don't seem to understand that despite a "constant and pronounced focus for 15 years" and a "heightened focus" since 2010"; that their efforts - "as evidenced by a steady issuance of guidance" - have produced the worst two IRR disasters in CU history - the Corporate collapse of 2009, which bankrupted the Share Insurance Fund, and the much more recent, but equally bad 2014 display of IRR non-acuity, RBC #1 !

Folks are
It should not be too difficult for NCUA to see why Congress, credit unions,  credit union members, and a whole host of other CU "stakeholders" have grown increasingly irritable about what appears to be an  irreversible agency adventure in IRR irresponsibility.

There does come a point when the Agency's reputation and credibility become irretrievable and its purpose as "an independent agency" becomes...

Tuesday, February 17, 2015


Cyber-security: Wac*A*Mole
... a constant struggle.
Cyber-security, hacking, and breaches are now everyday issues of concern in the world of credit unions - and rightfully so.  System security failures are costly in terms of time, resources, member inconvenience, and organizational credibility.  

Member trust is achieved only with great difficulty, and can now be lost in a cyber-second.

Regulatory agencies have taken note of the heightened risks of disruption and fraud.  We are sure to see greater scrutiny and increasing regulations in this area.  NCUA has used the rising cyber-threat to justify its request to Congress for authority to "supervise" all CU third-party vendors.  NCUA would like to apply its cyber-security expertise to third-party credit union IT providers in particular.

Government Affairs Conference 2014
In fact Chair Matz had the following to say about the topic at last year's CUNA Government Affairs Conference (GAC):

"You may be surprised to know, you are not the only ones who get examined on important information-security measures.  Like other government agencies, NCUA must adhere to strict security standards."

"Every year NCUA's Inspector General oversees an audit of our information technology controls and security procedures.  NCUA has security measures in place to protect your members' information.  To log in, examiners use secure government smart cards and both their hard drives and thumb drives are encrypted."   - Chair Matz, GAC - 2014,  Washington, D.C.

Wasn't quite sure how to reconcile that clear affirmation from the Chair about "your member's information" and "thumb drives are encrypted" with this little story:  Palm Springs FCU Members Get The Shaft.

NCUA's proposed solution to this "self-hack"?  Was to propose a regulation to require credit unions to encrypt credit union thumb drives!: It's Never Our Fault!

Let's add this up:

1) Chair Matz says NCUA has great IT security procedures.
2) NCUA would like to apply that expertise to 3rd-party CU data processors.
3) NCUA self-hacks ( and doesn't admit it in a timely fashion).
4) NCUA proposes additional regulation on CU's to resolve NCUA's internal security lapse.

How does this sound to you? How would you rate NCUA's logic, actions and statements?

Monday, February 16, 2015

Telling A Larry... Part III

On the Hill it's
very, scary to larry !!
Thought we might continue on a bit with the quiz , evaluating the testimony before Congress last week of Mr. Larry Fazio, Director of Examination and Insurance at NCUA.

Here are a few more quotes [try not to mutter "RBC" as you read]:

1)  "In developing any regulation, NCUA strives to ensure that the agency's rule makings are reasonable and cost effective."  a) True,                  b) False, c) THAT'S A LARRY!

2)  "NCUA additionally conducts an analysis to inform the agency's decisions in advance of regulatory action." a) True, b) False, c) THAT'S A LARRY!

3)  "The analysis also ensures that regulatory choices are made after appropriate consideration of the likely consequences."   a) True, b) False, c) THAT'S A LARRY!

4)  "NCUA's inability to oversee third-party vendors also poses a regulatory burden for credit unions."  a) True, b) False, c) THAT'S A LARRY!

And, without doubt the most Capitol Hill- LARRY -ious statement of all-time...

Sunday, February 15, 2015

Saturday, February 14, 2015

Seeing Things Differently...

Eye see!
People who have all the right answers in life, who lack the gene for uncertainty really worry me particularly when they are employed in an official capacity. 

Experience has shown most of us that - like it or not -"there is usually more than one way to skin a cat".  Differences in opinion should be respected, even when the reason one would attempt to skin a cat is not entirely clear ??!

A bit strange at times...
Decidedly differing views are a fact of life; something which should be expected and accepted. Admittedly that can be difficult at times, as some folks' thinking can be a little strange. That's why we have prisons, mental hospitals, and economic conferences.

Here's the best example I've ever seen to illustrate how truly different some folks see the world:

I have sexdaily.

Friday, February 13, 2015

Telling A Larry... Part II

"The truth, the whole truth,
and nothing but the truth..."

Let's turn once again to the testimony before Congress this week of Mr. Larry Fazio, a very important, senior muckedty-muck over at the NCUA.  

Let's do a little quiz - OK?  Here are 5 direct quotes which Mr. Fazio delivered earnestly, forthrightly, and with a completely straight face. From your actual personal experience with the NCUA, please rate each statement below in terms of truthfulness. Got it?

1)  "NCUA is ever mindful of the impact of regulations on credit unions, especially smaller ones."  a) True, b) False, c) THATS A LARRY!

NCUA's long-standing rolling, regulatory review process helps ensure NCUA's regulations:

2) "Impose only the minimum required burdens on credit unions, their members, and the public."  a) True, b) False, c) THAT'S A LARRY!

3)  "Are appropriate for the size of the credit unions regulated by NCUA." a) True, b) False, c) THAT'S A LARRY!

4)  "Are issued only after full public participation in the rule making process." a) True, b) False, c) THAT'S A LARRY!

And, everyone's #1 favorite...

Thursday, February 12, 2015

National NCUA Standards.....Flights of Fantasy.

Among citizens, there appears to be a growing belief that a centralized, prescriptive government is no longer efficient nor effective.  The strongest critics are harsher, and claim "the system is broken".

Personally, not ready just yet to "take up tea", to "occupy" anything, or to "move up into the mountains with an AK-47".  Think we have a very resilient "system" that has proved adaptable to change over the centuries - but there clearly is a need for reform.

Despots and...?
It's counter-intuitive perhaps, but the larger and more complex a project, an idea, a government, a society - or a credit union - becomes; the greater the necessity for decentralized management, control, and decision making.  Better and fairer decisions are made; responses are both quicker and more timely; and the risks of mistakes, corruption, and failure are significantly reduced.  Despots and entrenched bureaucrats of course do not agree with this view. 

NCUA's past humiliation with the largest corporate credit unions is an excellent example.  NCUA centralized regulation, monitoring, and control of corporates in Alexandria.  NCUA had full control and responsibility with direct "C-suite" NCUA leadership involvement, and with NCUA anointed "specialists" in-house, on-site, endorsing and second-guessing corporate management decisions and corporate Board governance.

With the corporates, NCUA's leadership failed.  They failed dramatically; they failed catastrophically; they failed financially; they failed "regulatorily"; they failed publicly; they failed abjectly; they failed.... thoroughly.

Same old, same old...
Yet NCUA seems to believe, as Larry Fazio's testimony before Congress yesterday indicated, that they can make their very public, very costly failures - including the recent, rank, "dead skunk" RBC proposal -  "go away". How?   By increasing centralized regulation, control, and monitoring over the surviving elements of the credit union movement - and now even "third party vendors" where NCUA clearly has less than no expertise.

Natural person CUs are being "bullied and
I am smiling and I am listening...
thrashed" to standardize, to centralize, and to adopt NCUA's national guidance - the very same "failed plan" which NCUA used to embarrass itself - and all credit unions - with its corporate self-destruction.  

NCUA seems to believe that if credit unions can be made to repent for NCUA's sins, all will be forgotten and forgiven.  NCUA should think again....

Credit unions might just take off if we could get some failed folks and failed ideas out of the way....  

Wednesday, February 11, 2015

Telling A Larry....

"I Wanna Testify...!"
The Parliaments (1967)
(...almost as good as
The Castaways!)

Really hate to be interrupted while reading the 450-page RBC rule draft (By the way, how you doing with your reading? You are reading it, aren't you?); but Larry Fazio from the NCUA was up before Congress today telling the truth - at least as NCUA sees it, which is often through a very narrow lens, backed up by some tightly closed minds.

But when NCUA testifies before Congress about how it is working hard to relieve the regulatory burden for credit unions; well, what can one say... which can be printed on a civil blog, in a polite manner?  Here's a link to the text: Larry Fazio Before Congress - 2/10/2015.

Mr. Larry Fazio
Burial complex?
NCUA has developed a strong reputation for having "a burial complex" in its proclamations, which simply means that you must start at the end or dig through the footnotes to find out what the Agency is really up to... they save the worst for last!

"Male cow stuff..."
So, true to form, after you have waded through a lot of "male cow stuff" in the testimony; on the next to last page (pg. 14) down at the bottom and in footnote #29, Mr. Fazio finally reveals what NCUA really wants (wags call this..."Telling a larry"!):

Monday, February 09, 2015

Something Doesn't Add Up....

"A little going away present..."

The buzz claims that the recent  CUTimes (2/6/2015) 
"DutyStation/Travelgate" exposé was an "inside job" - an attempted set up by "the usual suspects" hoping to discredit the "R-wing" of the NCUA Board - particularly past Chair Mike Fryzel.

Yet another Soap Opera
on Duke Street...?
After reading the blurb and sifting through "the dirt", think most folks would say "much ado about nothing", pretty petty, and doesn't the Agency have a few other issues of more import?  Like rebuilding its credibility and  reestablishing public confidence?

Lastly, much like the initial risk-weights in NCUA's RBC fiasco, somehow "the numbers just don't add up" - at least not to scandal.  Unless you look at them this way...