Monday, February 29, 2016

Marx My Words....

" (Fill in the blank ) is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies - robustly*."

- Groucho Marx

ro/bust/ly - adv., Eng., def: to bumble and blunder vigorously.

Sunday, February 28, 2016

Running The Numbers...

Le Pew?
NCUA statistical and econometric machinations are coming under increasing scrutiny. The strong whiff of "quantitative manipulation" and "political calibration" 
is becoming a "statistical stench". Not an unusual suspicion - nor ultimate outcome - for any organization which views itself as immune from, and unaccountable to the people it serves. 

"Stochastic" Wild Ass Guess!
NCUA has no published, rigorously challenged, standard baseline for its "analyses" of individual credit unions, nor the industry as a whole. Predictions and forecasts are at best presumptive, with no independent internal nor external challenge; which might be acceptable, if NCUA's gnomadic robusterians were "world class rated". No such ratings have as yet been identified. 

If there is no baseline, one might infer their analyses are baseless - right?       

Of equal note, NCUA most frequently focuses on comparisons of peer groups, cohort segments, regression analysis, normalizing "bell curves", computing historical trends and calculating medians - all variations on computing an average - that little bit of arithmetic even you and I mastered in third grade!

Here's an important refresher for you on "averages":

Saturday, February 27, 2016

Friday, February 26, 2016

Board Member Education

Who would argue against Mom, apple pie, or greater financial training for board members?  

Not me, because it is clear that some boards do not fully understand 1) accounting requirements, 2) financial statements, and 3) fiduciary responsibility. 

For example one Board with which I am familiar has repeatedly and very publicly in the past appeared to have significant lapses in all three of the above areas.  What is particularly intriguing is that this Board is perhaps the best Board that the institution has ever had in terms of financial, regulatory, political, and philosophical moorings.   It's a very, very highly talented group.  

The institution which this Board directs has:

  • Produced a $15 billion meltdown.

  • Failed in the past to publish in a timely fashion its required annual financial statements in violation of Federal law.
  • Been cited by its big four accounting firm for a material weakness in its internal controls. 
  • First lesson in your new financial training!!  "A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be detected and corrected on a timely basis."
  • Avoided a major prior year restatement of its financials only through a "sleight of hand" and by switching financial audit firms.
  • Botched embarrassingly, the initial release of the risk-based capital rule (RBC).
  • Verbally dissed Congress.
  • Has not established a solid, professionally experienced staff, nor a reputation for informed, progressive management.
  • Failed to appropriately update its technology.
  • Lacks transparency and accountability to its primary constituency - the American public. 

Pass that buck!
A board under the financial training provisions of the new NCUA regulation 701.4  "...may delegate operational functions to management, but not the responsibility..."

NCUA management's response to the above mentioned irregularities and material weakness in internal controls was:  

"NCUA is a small Federal agency and must focus its resources on essential functions."

"Small" is an unusually amusing "explanation".  A small whale is after all still a whale, isn't it?

Training like leadership is always a matter of setting the example.

Thursday, February 25, 2016


Time for a little Spring cleaning.  Just in case you've lapsed during the wintertime, into treating your spouse or significant other as another piece of furniture, get out the charm and personality polish and try a few of these.  Remember the best things in life are thee....

  • Clouds - This one is easy because you've done
    it before... long ago!  Invest a Spring afternoon in looking for shapes in the clouds.  Take along a little bottle of wine.  If you're really adventurous, choose a field at the end of an airport runway....
  • Rainbows - Always a Spring delight!  The next time you see one: stop, sit down and watch it until it completely disappears.  Never done that have you!? 
    Did you know that         ra
    inbows eventually fold up like beach umbrellas?  (Would I lie to you....?)
  • Eyes - Quietly and intently gaze directly into his or her eyes next time you're talking. ( No you haven't; you just think you've taken a close look lately.)  See if "it's" still there!

*** ( My attorney advises me that neither liability nor paternity suits against op-ed writers for unexpected pregnancies will hold up in court - you're on your own on this one!)

  • Picnic - Invite that special someone out for a picnic at 12:00 o'clock. So, what's the big deal with that?  Well, that's 12:00 am (midnight!) not 12:00 pm (noon).  Make sure there is a full moon and re-read the disclaimer under "Eyes" above.

  • Forgiveness - Remember to qualify for forgiveness you must "sin" a little first.
And finally, remember that...

Wednesday, February 24, 2016

Top Economic Forecaster....

The economic cycle?
Joshua Shapiro who works for Maria Fiorini Ramirez Inc., was named by Bloomberg Markets not too long ago, as the most accurate economic forecaster on the U. S. economy.

In commenting on the award and his forecasting prowess, Mr. Shapiro famously remarked:

"I'm a big believer that life is a crapshoot.  There are so many random things that affect your life."

On the ball!!

The often-in-error, but never-in-doubt "navel-gazers" on the economic quant team over at NCUA....

Tuesday, February 23, 2016

GAC: Hearing Is Believing?? Don't Think So!

"It's about the culture at NCUA."
"Once we built this new, modern regulatory framework and put the crisis behind us, we were finally able to shift our focus." 

"A top priority became making it easier for you to do business. "Easier to do business", is not only about regulatory relief."  

"It's also about something even larger.  It's about the culture at NCUA.  We needed to change our culture, to reset the default switch to "yes". Too often in the past that default switch was set to "no". But that changed."

- Chair Debbie Matz
Speaking at the 2016 GAC

Sunday, February 21, 2016

Congress Comments On NCUA's Budget... "Yiking The Hill" As Only NCUA Can!

REDACT - to censor or obscure part of a text for legal or security purposes.

*Redacted by the NCUA.

Mulvaney:  "Would you rather we just put you on budget here? Would that solve a lot of problems?  Just not make the credit unions pay, but have you be an appropriated regulator?  Would you like that more?

Matz:  "I'm fine the way it is."

" An independent regulator is not answerable to the entities it regulates."

Mulvaney:  "To anybody evidently. Not answerable to us [Congress]. It took me 18 months to get a copy of your budget."

Matz: "I'm fine the way it is."

Mulvaney:  "I figured you probably would be. Thank you very much."

Caution: It's pretty brutal !!!


Freedom Of Information Act (FOIA)....

Naughty, Naughty !!!

The NCUA was caught "red-handed" at the Congressional hearing, illegally concealing (redacting) information from the public.

Fifteen pages of information from the PriceWaterhouseCoopers (PWC) report - generally simply critical of NCUA's ineffectiveness - were classified by NCUA as "trade secrets" under the Freedom of Information Act (FOIA) and deleted from the public record.  [That NCUA may be inept is not exactly a "trade secret" within the credit union movement!]

Under oath, Chair Debbie Matz replied as follows:  

Q: "Do you believe that [the redacted] information to be a trade secret?"  

A:  Ms. Matz: "I don't."

Q: "Did you approve that decision."

A:  Ms. Matz: "I wasn't aware of it."

Ah, the classic inside-the-Beltway "answer" !!! Has a bit of a whiff of...

Getting A Legal Opinion From OGC On MBL ? A Risky Proposition....

NCUA - practicing
public self-emolation...
Guess we all read in passing (see here) of NCUA's disastrous performance before the House Financial Services Subcommittee on July 23rd. No surprise; so what? - right?  

It has become almost second nature of late to expect the worst when NCUA is publicly held to account for its actions.

Well, believe it or not, this performance was 
different, exceeding by far all of the Agency's prior blundering follies and pettiness.  This go-round, NCUA's contempt and disdain for credit unions was unequivocally clear, on parade for all to see - including Congress!.

But take a look for yourself at this little exchange between Congressman Mulvaney from South Carolina and the NCUA Chair on transparency and the overhead transfer rate (OTR).

Rep. Mick Mulvaney
Mr. Mulvaney indicates he gets a lot of questions on the OTR from folks in his district; so he went to the NCUA website to do a little research [as any well-trained, UNC-Chapel Hill lawyer would!].  And here's how the testimony transcript proceeds:

Mulvaney:  "So, I did something I think is very reasonable, which is I went to your website to get the OTR review, which is the one done for you by PriceWaterhouseCoopers (PWC) that you've mentioned in your opening testimony."

"And when I turned to the first section, which I think is a fairly reasonable section for somebody to go to try and get up to speed on it, the executive summary, I got to page five and it says the findings and conclusions of this study, which are based on available facts and circumstances, are presented below. And I get an entirely redacted section."

"In fact that happens a lot.  There's a bunch of different places that are redacted and I think 15 pages are redacted."

Mulvaney: [Noting that he has obtained an unredacted copy of the PWC review] "OK I'm going to read to you one of the redacted sections that you all cut out of the conclusions of the executive summary regarding transparency..."

An "OTR" House ?
"It says: 'Based on the PWC review, the OTR was considered lacking in terms of the extent to which the classification of NCUA's activities between insurance and regulatory represents a consensual view.' It goes on to say: ' It is recommended that NCUA should consider providing more visibility on how it characterizes its activities to the different industry groups and credit unions and possibly solicit their feedback with regard to the reasonableness and accuracy of the classification.'"

Mulvaney:  "But let me ask you this question, who made the decision to redact the 2011 report before it went up on the website? Was that you or was that somebody else?"
Not again?!!

Matz:  "Our general counsel's office."

Mulvaney:  "Did you approve that decision?"
You're sure?

Matz:  "I wasn't aware of it."

Mulvaney:  "Do you believe that information to be a trade secret?"

Matz:  "I don't."

Mulvaney:  "And the answer is you're going to go ahead and put it up?"

Matz:  "Yes."

Mulvaney:  "By the way, the irony of redacting something which says you should be more transparent..."

Saturday, February 20, 2016

Less Is More....

Legal proceedings?
Know you've heard by now of the little row which occurred at Thursday's NCUA Board meeting (CUTimes - 2/17/2016 - link)

Seems most of the dispute centered around Mr. Mark McWatters' thought that prior to voting on the new, "sure-to-tick-off-the-boinkers", member business lending (MBL) rule, that the Board should have in hand a definitive legal opinion from NCUA's Office of the General Counsel.  Chair Matz and Mr. Metsger seemed to feel that creating a legal opinion in arrears, if you needed it, was more effective and efficient.

Not sitting around?
Chair Matz even asserted that it would be helpful to the NCUA staff if Mr. McWatters was "in the office more than three days a month". 

I quite often have trouble following the Chair's logic and have frequent questions over the repeated legal and judgmental blunders of the staff, but on this issue I fully agree with the Chair!  

Why?  Because it is very clear to all credit unions - despite his brief tenure as an NCUA Board member - that the more Mr. McWatters is around the better!  The Agency is more transparent, more accountable, more responsible, and more rational. Mr. McWatters has provided a much needed compass for a seemingly rudderless ship.

But of course, it works both ways. Given their recent history (last Thursday's meeting for example!) and to be fair, the rest of the Board should cut their schedule back to say, three days a month. Suspect that performance and accountability at the Agency would not be adversely affected and might actually improve. 

A classic example of the axiom that often...

Friday, February 19, 2016

The Terrible Two's...

NCUA's February Board Meeting:
 Leadership In Action!!!

  Yet another example for Congress of...



Wednesday, February 17, 2016

NCUA: A Truly Unappealing Agency?...

"NCUA Board Member Mark McWatters is calling for additional steps to address what he said are "deficiencies" in NCUA's examinations appeals process." [, 1/19/2016]

Mr. McWatters was also very blunt and direct about his views of the "mostly fictional" existing NCUA appeals process, in NCUA's own flagship publication NCUA Report [January, 2016].  "In the final analysis and regardless of the improvements that the NCUA attempts to pass off to the credit union community as due process, the NCUA still acts as judge and jury given as every step of the appeal process is decided by an employee of the NCUA."

"In my view, it is difficult to defend that the current process is completely above reproach and not tilted toward a self-serving outcome."

"I believe our appeal process is contrary to the rule of law and constitutional due process."

Sunday, February 14, 2016

Too Big To Give A Rip...

Question: What is a Wall Street investment banker?

***Wall Street Journal*** 
[2 days ago folks!]

["..for misleading investors about the subprime mortgage loans underlying the securities it sold to investors."]

Answer: A Wall Street investment banker is ...

Saturday, February 13, 2016

About Those Bankers FOM Letters: Banks Always Seek What's Best ....

One very positive thing you can say about the
"Too Big To Care" banking industry.  

They can always be counted on to 
"do the right thing"...

Friday, February 12, 2016

About FOM: Those Bankers' Letters...

The Abusive Bankers Association (ABA) 
Is Just Screwing "Around" 
(Or The American Consumer)
...  As Usual !

Inexplicably, the U.S. Department of Justice has as yet
[... corruption still seems to pay (very well!) in banking!]

Thursday, February 11, 2016

About FOM: What's The Definition Of The Word "Farce"?

The American Bankers' Association Pretending To Protect The American People From The Threat Of Credit Unions!

Blatant & Brash, Bozo Buffooniaries !
(Will concede that banks pay way more in fines for unethical activity, than credit unions pay in taxes!)

Wednesday, February 10, 2016

CUNA "Choice": An Open National Dialogue...

"CUNA Proposal Passes Membership Choice..."
[Feb. 8, 2016]

Mr. Patrick S. Jury, Chair CUNA Corporate Governance Committee, in recommending the proposed CUNA by-law amendments, has this to say:

" This new governance structure will allow CUNA to modernize and become more open, responsive, and accountable to all our members. These proposed bylaws are an important component of that."

"Please let me know if I can answer any questions about the proposal or the process currently underway for the membership to review and vote for its approval."

Mr. Peter Strozniak, the CUTIMES journalist following up on the bylaw amendment story, reported the following when he reached out to Mr. Jury to answer a few questions as requested...
"Jury was unavailable for comment.  An automatic reply email read that he was on sabbatical leave and is scheduled to return May 1."

Since the deadline for ballots is March 18, not sure how much help Mr. Jury will be after May 1 with answers to member CU questions...

Tuesday, February 09, 2016

Pink Slips...

Now now, stop that!! 
Don't get so anxious! 

[We're not going to be talking about lingerie, so everybody just calm back down - okay! We have more serious business to discuss...]

As you've seen [link], CUNA has finally come forth with proposed bylaw amendments to implement "Choice" (or "optionality", if you speak "league-ish"), which will permit credit unions to join CUNA in the future, without requiring an equal commitment to a home state credit union league. To me, it looks like CUNA has, yet once again,  slipped up.

Proponents of "Choice" have called for change based on 1) the unsustainability of the existing CUNA/League structure, given the high costs borne by a rapidly shrinking number of credit unions; 2) the multi-state service areas of an increasing number of credit unions; and 3) the absence of a direct CU voice and dialogue at the national level.  

Opponents believe change will 1) endanger the political effectiveness of CUNA and the leagues at both the state and national levels; 2) create adverse competition among leagues; and 3) potentially weaken and fragment "the united front" credit unions claim to enjoy. Traditionalists have also counseled against too abrupt a rush to an untested model - "a slippery slope" - without extensive, considered discussion among credit unions. 

Both arguments have merit; and, as with most
things in life, the truth - "the right answer" - may well lie somewhere in between. Y'know a "Three Bears Solution" - not too hot, not too cold, ... 

But, CUNA seems to have arrived at a solution which combines the worst of all worlds!  CUNA's bylaw proposals appear slipshod - some would say reckless - by implementing "Choice", while consolidating power within the existing CUNA Board and central staff. Not exactly a formula for direct representation and better dialogue among credit unions at the national level! CUNA's weakness is not that it is too closely connected to the leagues; CUNA's weakness is that it is so thoroughly disconnected from credit unions - and has just proved that fact once again with this action.

You should take great notice that there is no clear timeline for the discussion and implementation of the proposed organizational reforms. No dialogue on structure, scope, purpose; no survey, no polls, no focus groups, no member interaction.
"Don't ask, just tell?"
Not even a 2016 "meeting of the minds" in Estes Park - heh, don't laugh, it worked in '34! But as cooperatives, guess we've outgrown all that.... or maybe it just slipped their minds.

What the leadership of CUNA - Board and staff - may have unintentionally "slipped into" with this vote on "Choice", is a referendum on their leadership
A real risk!
Assume it's clear, that if these proposals are voted down - which is entirely possible given all the recent controversy; the membership of CUNA will have delivered a clear message of "NO CONFIDENCE" in the current management and Board leadership.

Which would - in the real world - result in the delivery of a whole lot of...

Monday, February 08, 2016

Hog Plots...

Again, I'm not suggesting (see Flower Plots - 2/4/2016) that you do anything inappropriate or malicious.  

This is, after all, the "Era of Personal Responsibility" in America - except on Wall Street, at several addresses on Pennsylvania Avenue, or at any point within spitting distance of a candidate's campaign tour bus. Accountability is the thing these days - whether you've been financially sucker-punched or not.

This is just, shall we say, a guerrilla marketing
concept.  Note I said concept, that doesn't mean you're required to do anything. Your decision, your choice - it's a free Country! ( except on Wall Street, at some addresses. ...well you get the idea.)

If you Google around a bit for "pig nose stickers", you'll find that for about $10 bucks you can purchase a roll of 1000 of these...