The Practical Theory Behind NCUA's RBC Regulation...

A recent selfie...

Well, have finally finished reading the 450 page, "second coming" of NCUA's risk-based capital rule (RBC).  Now, that you and I have both spent the time to do our "due diligence" in reading this significant piece of.... ("legislation"), guess we should talk about it a bit.  

The proposed RBC rule is a full-face reflection

of the character, capacity, and credibility of the "working group" at the NCUA.  The RBC rule quite simply lacks character, capacity, and credibility.  

We are at a crossroads....

Inevita-Bull !!!

Presto!!

It appears that the end result of the Agency's quantitative analyses and economic forecasting has been to help improve the professional reputation of palm readers and astrologers...
   
When commenting on the future of interest rates, the Capital Markets Specialist stated most assuredly that a rise in rates was "inevitable" and that we must include that certainty in our ALM modeling and "pre-planning".

When asked "when" rates would inevitably rise, his

Very bullish
on rates!

answer was, shall we say, "ambiguous". When asked "how much" rates would inevitably rise by, he became a bit "distant". When asked if there was such a thing as "post-planning"; and, by definition wasn't all planning logically "pre-"?  His nose became somewhat disjointed and Rudolph-reindeerian in hue.

We did acknowledge that we had heard of "post-mortem" planning and agreed that death did in fact appear to be "inevitable".  So we asked if he were suggesting that his forecasts would inevitably lead to the death of the CU ?  If so, we felt we had found an area of strong, mutual agreement....

You Tricked Me...

... and I have never gotten over it !

Thank you !

Make Your Saturday Worthwhile...

Alright … it's Saturday and you're not all that busy - no excuse there.  

And you probably can give up a couple of lattes over the next few weeks to help some child who would rather not be in the hospital today…. in a hometown near you.  Can't you?


It takes just a little help from you, from each credit union to make a world of difference in that kid's future… a gift of health, a gift of time, a gift of hope.

Can you take one minute to help that child?  

Here's the link: Miracle day.org

(Support Your CU Run…. Thank you!)

Examining An Average Risk...

Next career goal: the NCUA?

Was arguing (their terminology) / discussing (my terminology) economic modeling and interest rate forecasting with a couple of Janet Yellen/Ben Bernanke wannabe-type examiners the other day.

Sure I'm calm...!

The capital market specialists (the real"capital punishment"!) sensed that I had little faith in their forecasts and analyses.  Perhaps it was the hysterical hair-pulling, the rolling wildness in the eyes, or the profuse foaming from the mouth which betrayed my calm demeanor. Actually my "faith" in their grasp of economics and, more particularly, their grasp of reality was far less than little.... 

Gave them very
"high ratings"!

It has never concerned me too much when a person doesn't understand something; because, at heart, life is about learning new things from new experiences... and hopefully, we all do so everyday! "Not knowing" is not where problems generally arise.  Problems most frequently arise from folks - "specialist" types - who are dead-certain in their "wisdom", confirmed in their understanding - the "know it all", the self-assured fool, who lacks the gene for listening.

Our "argument / discussion" centered around the value of statistical averages, regression analyses, Monte Carlo stimulations (sp?) - "the basic" modeling sort of stuff.  If asked, I might have confessed that I wasn't (within several standard deviations!) always real sure what all that "stuff" really meant. But of course, they were more interested in reveling in their own "intelligence" than in exposing my "ignirance" .... guess you know the type.

"Just press 2 & 4..."

Anyway, we parted on less than amicable terms - much less to be exact.  As the elevator door was closing, wanting to make sure they knew "where to go"; I told them that the parking deck entrance was located on the third floor; and that, if they would press button two and button four that "on average" they would get there.

I haven't really bothered to check on them since.  Do you think I should....?

Credit Union Marketing.... SOS !!!

WASSUP?!

Spent several mornings recently trying to offend the mauve and magenta crowd – apparently with some success! 

While most of us believe in what we do, few professionals (create and then) accept their own press with as much full-gulp believability as do credit union marketeers. 

A colorful group!

The glitz and glitter group is "sold" on itself; and well it should be. One look at the achievement levels of CU marketing work – all segments, all formats, all media – clearly convinces one, that in style and technique, credit union marketing now plays Avis to no one. 

And what’s best, the marketing people are fun, brash and sophisticated – many with egos normally found only among CEOs!

The CU Glitterati!

What got this crowd uptight was the comment that “Credit union marketing adds no appreciable value to the movement.” Uptight became upset when it was asserted that “Any credit union product can be marketed when pushed with a sufficient lack of scruple.” And, of course, it was persona non-grata when it was pointed out that despite the extremely high quality of their work, “There really is little point in doing well that which shouldn’t be done at all.” 

Sounds like Oscar Wilde, doesn’t it! Well, let me explain....

Summer Soldiers and Sunshine CU Leadership....

"The hottest places in Hell are reserved for those who, in times of great moral crises, maintain their neutrality."

- John F. Kennedy
 (June 24,1963)

Congratulations to all our "wait and see" leaders!!

Looking Into The Future...

NATURE is one of the best known scientific journals in the world.  Been around since 1869 - a pretty good track record, must be doing something right!  The journal is published weekly and is the most frequently cited cross-disciplinary publication in the scientific realm. If you want to take a look, they can be found at the "power-position URL", www.nature.com!


Browsing the website last week, came across the following story headline:

The Myopia Boom

Short-sightedness is reaching epidemic proportions.

Some scientists think they have found a reason why.

'Course couldn't agree with that headline more, as an observation of the current state of our world! But, being somewhat personally myopic, immediately assumed it was about regulatory reform - particularly at our independent agency - since that's all we seem to talk about of late. Became quite hopeful - a scientific breakthrough!! - a move beyond blah, blah, blah! 

Unfortunately the article was...

New Feature: "NCUA Larry Of the Week"... NCUA Third Party Oversight

From The CUTimes:
               (3/18/2015)

From a Heather Anderson piece on NCUA's legislative priority to acquire regulatory powers over all credit union third party service providers: 

Really nuts!

"However, it also seems like a major NCUA operating budget increase would be unavoidable."  

"The NCUA insists otherwise. Director of the Office of Insurance and Examination Larry Fazio told a breakout group at GAC the agency is hoping to keep vendor authority as budget neutral as possible. Most people found that statement unbelievable." 

If you ask professional credit union leaders (and of course, NCUA would never think of doing that!), they will quickly tell you that acquiring the expertise for compliance, cyber-security, risk management, monitoring and control is anything but "budget neutral"!  Knowledgeable, experienced people are an expensive, scarce resource at this time.

But, maybe this isn't another NCUA "larry"; perhaps the critics have forgotten that NCUA has developed some unique, internal approaches to training...

Choices....

"Life is the sum of all the choices you make."

(... and don't make!)

From The Field: No Man-ners...

"The janitor quit last week and he didn't even have the curtsey to..."

"... For A Problem That Does Not Exist."

Safe-guarding your interests!

As the April 27th comment "drop-deadline" approaches for RBC 2, this grog of regulatory absurdity appears to be on life-support, with no one willing to accept the duty of pulling the plug - at least no one at "the leading trade association" CUNA and among its vassals at the Leagues.  Ineffectual "C-eunuchs"?  Yet once again it would, unfortunately, appear to be so...


A sliver of hope remains that forceful leadership may still arise on the NAFCU side of the house - opposition that is potent, decisive, real.  But time grows short.  

(You have done your due diligence and read the 450 page draft of the rule - right? Yeah, right!).

Think White House security, Benghazi,
the VA...

Some folks - including 
C-eunuchians and their vassals - still seem to have difficulty understanding that our government (and its "independent agencies") was created to serve the people and not the other way around.  And, that government (and its "independent agencies") is composed of frequently fallible human beings, who, from time to time, have serious lapses in performance, wisdom, and sanity.  These lapses do occur and are understandable in large, complex (distant and unaccountable) organizations - whether they be TBTF banks or too remote to listen "independent agencies". The harm arises when C-eunuchians and their vassals lack the courage (and other tools) to yell: "The Empress wears no clothes!"

Credit unions do have one fine Ohio leader who has laid it on the line succinctly about NCUA's RBC 2...

Send For The Doctor ....

Chair Matz

As you know we have an NCUA Board vacancy coming up this April.  Chairman Matz's term expires; and, as you also know, even the most competent of Board members can not be reappointed.  So we have a new opportunity at hand....

Was talking to a long-time friend about this matter a few weeks ago.  Won't tell you his name, but will tell you he is an exceptionally successful Credit Union manager from California, with an impeccable record of leadership over 30 years.  He's good; I mean real good!  And, still looks like a beachboy surfer - flattop, golden suntan, Hawaiian shirt, probably still drives a Muscle car!  Down-to-earth, good-natured, easy laugh, wildly knowledgeable, and "eat-up" with credit unions through and through.

I told him, listen I've got the ideal candidate for the NCUA Board vacancy! Want to here about it?

Sure, what's the scoop?

Well, how would you like a candidate who had a superb knowledge of the financial marketplace; had Ivy League-level academic credentials; was politically savvy and super well-connected in DC?

Oh man, that sounds great!

Well, what if I told you that in this "politically prissy, correct world" that the candidate was also a female who could "talk trash" equally well with Jon Stewart or Rush Limbaugh; had Mid-western, heartland-values and roots; was a geeky-sort of "babe with baby blues", who could handle high-heels; and probably was a Pinot Gris sippin' Episcopalian,  packing an authenticated US of A birth certificate!

C'mon, you're making this all up; it's too good to be true!

No I'm not and there is more!  What if I told you

Free pass in Congress!?

that the "b-word folks" were so terrified of this person that if we would "take her off their hands"; they would probably never again mention biz-loan caps, field of membership, or 'da tax exemption!  Really, they would probably issue us a perpetual "get-out-of-jail-free" pass in Congress!!!!  I mean is this the opportunity of a lifetime or what??!!!  And - icing on the cake - this lady not only knows what a credit union is..... she actually belongs to one!!!??  I mean, I mean can you stand it?!!! 

Yeah right;  you're crazy - in an absolute sort of way!  Where are we going to find an ideal candidate like that?   Smart, qualified, savvy, articulate, leader, dynamo mover and shaker ..... I'd go for it in a heartbeat, but that kind of talent doesn't usually come wrapped in just one package - especially not an Episcopalian babe sporting stilettos - that's just a bridge too far!!

Oh yeah!  Well what about Dr. Elizabeth Warren...?

A-h-h-h SPRING !!.....

... a Catherine Spruill spirit-lifter original !!

The Greatest Risk To The Credit Union Movement...

ACCORDING TO THE NCUA BOARD THE 100 MILLION MEMBER-OWNERS OF AMERICA'S CREDIT UNIONS DO NOT EXIST!*

"... we determined that disclosure would speak
to an audience that does not exist."

- Mr. Scott Hunt
Director of National Examinations and Supervision


If you do not exist, why should you expect to be heard?



* Approved by the NCUA Board (on a 2-1 vote) - April 24, 2014.
(complete insulting video at www.ncua.gov) 

Becoming Essential To The Membership...

Old Name FCU

Name changes have become increasingly frequent within the credit union movement over the last few years.

 As the economy has shifted to a service focus, and as business sector consolidations have taken hold in earnest; the fields of membership served by many credit unions have broaden dramatically - far beyond the original local plant site, military base, or neighborhood school district. 

Serving wider geographic areas or multiple small employer groups; quite often calls for a new name for the credit union - to rebrand, refocus, refresh, renew, and relaunch the credit union as a community-wide cooperative.

Who picked that name?!

While changing the name of a credit union is difficult and "politically" sensitive, the toughest challenge is in selecting the new name.  Want to pick a fight or bring on a swarm of stinging critiques? Just let it be rumored that a CU name change is planned.  But that's nothing compared to the "public water boarding" that will occur when the new name is finally announced; prepare "to be drawn and quartered"! 

But quite frankly, some credit union "name

Ebola FCU !

changers" deserve exactly what they get!  Particularly those credit unions which select new names which conjure up visions of ebola, anti-reflux meds, or exotic vending machine prophylactics!  Some CU folks pay big bucks for "branding consultants" to create that opportunity for the credit union to be publicly humiliated! Emerga FCU, Profunda CU, Excessus Financial, you get the picture!

But some credit unions get it right, check it out...

Measuring Market Support...

CUJournal:  

"Newly Chartered 'Pot CU' Could Open Doors..."

Q: Are they doing any focus groups?

Regulatory Credo...

"Nothing so needs reforming as other people's habits."

- Mark Twain

From The Field: Boing... ?

Boing pursing?

"We have several new employees who have signed up and will boing pursing their insurance licenses."

Risk-Based Capital: NCUA "So So" on Secondary Capital - A Lack of Regulatory Credibility On The Hill

NCUA: The "SO SO" Agency
(Same old same old...)

Guess you think this has become the regulatory version of the movie "Ground Hog Day", don't ya ! 

Well, in a sense that is exactly what NCUA's risk-based capital (RBC) proposal has proved to be - a continuing loop of repeated missteps by the Agency.

The "Three Pillars"
of NCUA RBC:
Silly, sillier and thoroughly ridiculous! 

Our list of RBC #1 "bloopers and blunders" included CU punitive capital requirements on mortgages, MBLs, GSE and local government investments, Fed deposits, and NCUSIF balances.  

On top of that,  NCUA added less than transparent - and definitely "ham-handed"- attempts to unilaterally rewrite the Federal statutory definitions of net worth, complexity,  and prompt corrective action (PCA) without Congressional consent. 

And for really good measure, NCUA accentuated the lack of trust all credit unions feel in "giving a loose cannon more ammunition", by trying to slip in the unchecked and unaccountable authority implicit in "individual minimum capital requirements" (IMCR) and third party vendor reviews.  NCUA does seem to understand the old saying: "If you're going to break the law, at least make it worth your while."

While RBC2 is better - like being killed by a train is better than dying from ebola - …

NCUA GAC Leadership/IQ Test....

THINK IT IS PRETTY CLEAR, BUT YOU MAKE THE CALL:

CHAIR MATZ:  GAC SPEECH

MR. McWATTERS:  GAC SPEECH

MR. METSGER: GAC SPEECH

CUNA GAC: Tweedle Dee/Dum .....

GAC: Thunder punchers!!

For those of you who have to work and, therefore, could not attend the CUNA Government Affairs Conference (GAC) in D.C. this week, you missed two important speeches by NCUA Board members.

But fear not! Here is the crux of the poignant, crucial messages delivered by each Board member....

Chair Matz:  

"Today, you've heard about five significant regulatory relief items you can look forward to NCUA addressing this year, starting this week.  As you've heard me say from this stage before, I'm always open to hearing your good ideas.  I'm committed to removing regulatory burdens under our control that do not compromise safety and soundness.  We will listen, and where sensible, we will act.  We've proven that time and again."

"We don't hold you back;
we hold you up!"

"As I've said before, NCUA is not here to hold you back."

"Have A Nice Day !"

Mr. Metsger:  

"It is truly great to see all of you here today."

"So forgive me if I pass on just throwing you a bunch of applause lines this afternoon.  I respect you too much for that." (That sounds a bit like Mr. Rogers! The applause, of course. was deafening!)

What's "The Difference"? Credit Unions Do, Banks Don't !

B-oinkers keep yelling about credit unions!
Yellen sees it differently...

The American Bankers' Association (ABA) and the Independent Community Bankers of America (ICBA) repeatedly call for that imaginary "level playing field" between banks and credit unions.

"The squealers" claim that there are no longer any great differences between banks and credit unions. The distinguishing lines between an investor-owned, for-profit bank and a member-owned, not-for-profit cooperative they grunt are entirely fictional.** 

**  Would suggest that the ABA and the ICBA publicly encourage all their members to practice operating on a not-for-profit basis for the next three years, since there isn't any difference. 

The Real "Vulorker Rule"?*
* (Vulgar porkers!)

It's a bit remarkable that anyone would still give credence to this herd of self-serving "oversized hogs", but their snorting continues to muddy the water from time to time in the halls of Congress.

But one way banks continue to clearly differentiate themselves from credit unions was
pointed out by the Chairman of the Federal Reserve last week . Ms. Yellen said...

Three Kinds Of People...

Pars, birdies,
and bogies...

Willie McRae describes himself as probably the oldest working golf caddie in the world.  He has been caddying at the legendary Pinehurst golf courses since the 1940's. 

McRae has caddied for the full gamut of humankind - everything from princes to polecats - during his career. He says: "You got maybe 10 or 12 different types of people.  Well, three really: good, better and worst." Sounds about right - doesn't it! 

Best advice ever given? McRae said he was once asked by a frustrated golfer about the biggest problem with his drive?  He told the man: "Your biggest problem with your drive is that you're standing too close to the ball...

From The Field: Lobby Traffic

"I Love My CU !"

"The love seats in the branch lobby are well-worn and need to be thoroughly cleaned."

From The Field: Highly Qualified...

Had a job applicant recently who was fresh out of

the University of North Carolina at Chapel Hill. Great grades, super personality, energetic self-starter, ready to dive in, eager to change the world.

The interview was moving right along until I asked if she had any "prior work experience"? She seemed stumped, looked embarrassed, and became flustered. 

She's good at handling
all kinds of stuff...

Finally she blurted out that growing up on a farm in rural N.C., she had always worked full-time "helping my Daddy clean out his chicken houses".




At that point I simply closed the folder and said...