Tuesday, May 31, 2016

At The Drop Of A Cat....

You wouldn't really try that with me,
would you?
A friend (yes, I have one.) recently pointed out that it was axiomatic that regardless of how you drop a cat, the cat will always land on its feet.  

Having always heard that to be true; and having actually conducted that experiment several times, in my youth, with a real-life, increasingly frantic cat; I readily agreed to the wisdom of that observation. 

He next noted that if a buttered (or peanut buttered!) slice of bread slips from your grasp, it will always land "face down" on the floor.  And, having had that exasperating experience many times in life, I also readily agreed to the truth of that observation, too. 

But okay, "What's the point? So what?", I asked.

He said the profound question which arises from these two truths is....

Monday, May 30, 2016

Sweet Potato Pie....

Congress at the wheel
of the Farm Bill.
As you probably know "THE FARM BILL", a terrifically complex piece of federal legislation, which affects - in one way or another - just about everyone in America is currently under intense debate in Congress (isn't everything!).  In reading "some stuff" about the legislative debate ran across the following:

Tuber or not tuber?
That is the question.
"Farmers aren't the only ones waiting on a deal.  Farm groups say they want Congress to get the job done. "

"Sue Johnson-Langdon, Executive Director of the N.C. Sweet Potato Commission, ...."

The sweet "potatoe" (that's the Republican vice-presidential spelling) is the state vegetable of North Carolina!  North Carolina now produces over 40% of the national crop of sweet potatoes.  Since N.C. is now an almost all "red" political state, there should be endless opportunities to promote the "red potatoe", 'course the Dem's may want to also support sweet potatoes - "the potato of color" - as a social justice issue...

Sunday, May 29, 2016

Things Which Make Me Nervous...


"Cats which jump up into your lap,
 and begin pawing around to soften up their resting spot..."



"Don't make
 the mistake
 of taking yourself
 too seriously."  

Saturday, May 28, 2016


There was a time when one of the people with whom I lived was a tow-headed eight year old named Thomas.  He was a quick study and widely notorious for a dedicated interest in mischief (probably comes from his Mother's side).

Thomas and I spent several mornings one spring watching a diligent robin convert four Aegean-blue eggs into baby birds. The nest, which hung on a low limb near our kitchen window, gave us a clear view of all the excitement.  The mother robin worked incessantly to feed her particularly vocal, new brood.

Leaving for school one morning, Thomas noted that there were only three birds in the nest.  Outside, we discovered the reason.  The tomcat from next door lolled beneath the nest playfully toying with the luckless fourth.  The coup-de-grace was imminent.  Thomas, of course, wanted to save the victim, but it was quite obvious that the damage had already been done.

I explained to Thomas that these situations were part of life and that cat and baby bird were just fulfilling their fates.  The cat was only doing what came naturally, and for Thomas there was a great lesson in life in all this. Thomas' wide-eyed look reassured me that the eloquence of my explanation had touched his heart and reached his tender mind.  Such moments make fathers feel invincible.  Off we went to work and school, father and son philosophically bonded for life....

His mother called later that afternoon...

Friday, May 27, 2016



Did you really say that?
Did you really see that?
Did you really hear...
Most of us have experienced that "pregnant pause' that "awkward moment of silence" which occurs from time-to-time in the midst of a conversation.

 In those moments, it's almost as though time comes to a complete halt; for just a second or two, everything screeches to a "what next", dead-stop.  And then, just as abruptly, the conversation resumes as if nothing has happened.  We all ignore "the mysterious gap" and act as though we didn't notice.  Life goes on.

Time Warps...
From my experience, "the time lapse" occurs when most folks in the group have an "I can't believe he just said that" or "I can't believe that just happened" private personal thought - and then out of politeness, or whatever, we choose to overlook our shock, ignore the gaff or faux pas and move on. 

Imagine you're thoroughly confused at this point so let me tell you about a recent example...

Thursday, May 26, 2016

Wednesday, May 25, 2016


Well, since you had the nerve to ask...

Q:  What is the definition of an "economic robustarian"*?

Tuesday, May 24, 2016

The Real Tax Exemption Problem...


Mr. Richard Fisher is the President of the Federal Reserve Bank of Dallas.  

Recently in a speech, Mr. Fisher said "banking giants, a dozen of which control almost 70% of the total assets in the banking industry, operate under a privileged status which exacts an unfair tax upon the American people."

"Implicit government policy has made the megabank institutions exempt from the normal processes of bankruptcy and creative destruction."

"Rescuing too-big-to-fail banks from their bad investment decisions imposes an enormous economic burden on the American people. It also perpetuates a sense that powerful banking mandarins operate above the law and penalize the hardworking citizenry."

Monday, May 23, 2016

"Branding": What Marketeers Miss.....

We are not striving to differentiate ourselves;

... we are striving 
to distinguish ourselves.

Sunday, May 22, 2016

Shopping for New Ideas At NCUA ... Finally?

Break-out idea??

"I can't understand why people are frightened of new ideas.  I'm frightened of the old ones."

- John Cage

Link [CUTimes 5/20/2016]: New ideas & fresh air - at last! 

Seven reasons to get excited about the new NCUA Board...

Saturday, May 21, 2016

Always Right…?

Low opinions ??

"The man who never alters his opinion is like standing water, and breeds reptiles of the mind."

- William Blake

Link: Spot the snake!

Friday, May 20, 2016

Making The Right Choice...


Robusterians: Foolish Granularitans ??...

Shifts and Shocks, Crash and Burn !!
Martin Wolf is an experienced, highly-respected, economic journalist for the Financial Times.  Mr. Wolf has recently published a book ("The Shifts and Shocks: What We've Learned - and Have Still to Learn - from the Financial Crisis") which explores many of the financial and regulatory mis-steps which led to the global recession.

In commenting on the book, Wolf had this to say about the ineffectiveness of our - still very much alive and preening - gaggle of honking "robusterians":

Thursday, May 19, 2016

Disparate Impact...

Always had a problem with risk-based lending at credit unions for several reasons:
Risk-based lending...Baaaah, baaaah...

  • Too impersonal -  little room for exceptions, nor  for mercy.
  • Credit score decisioning is based on a false statistical model - correct at the macro level, unfair and abusive at the micro/individual member level.
  • Pricing "for risk" substantially overcharges the vast majority of consumers in the higher risk brackets.
  • Risk-based pricing is a subsidy for the more affluent.
  • Charging the poor more - unjustly - increases the risk of default, defies logic and all sense of fairness.

(....but other than that I have few concerns about the practice.)

A Legal Opportunity... For Lawyers!!!
The shadowy threat out there, which has always been waiting to bite CU risk-based lenders on an indelicate part of their anatomy, is the concept of "disparate impact" - which simply says that if something you do as a lender unfairly discriminates against a segment/class of folks, then lawyers are going to make you cough up a whole lot of cash to make amends.

That time may be at hand!  First, notice that the CFPB has started to bandy that phrase - disparate impact - around a good bit on several consumer financial issues.  But, perhaps. of more immediate interest may be the following article from the CU Journal: "How To Drill Down Into Your Portfolios."  Particularly this quote from the author who works for - you don't say! - a credit bureau:

"The article promotes the "importance of trended data" in risk rating ... "this requires the ability to trend consumer credit data, identify specific member metrics, and track those changes over time.  The most successful lenders have incorporated these metrics into their day-to-day processes. They consider trending one of the most important and effective techniques used to vector behavior and segment appropriately."

So far so good, it's just another infomercial, but then: "By quantifying a direction and magnitude of change, lenders are finding that while two members might have the same credit score and credit card debt today, they fall within markedly different risk profiles."

Lenders are finding:  "Markedly different risk profiles,... same credit score?!!!"  ( That spells:  d-i-s-p-a-r-a-t-e  i-m-p-a-c-t...!)

Your Honor, I rest my case.... 

(Get out the checkbook...!)

Wednesday, May 18, 2016

How A Trade Association Adds Value.... Or Even Better: NCUA C'mon Heal Thyself!

"Bank exams too often are failing their purpose to keep banking strong and banks focused on serving customers.  Too many banks are worse off as a result of their exams."   - ABA Banking Journal 

So, what does the ABA do to address the concern? It hires two experienced, prominent financial experts  - Dr. Robert Litan (Kauffman Foundation/Brookings Institution) and Jerry Hawke (Washington lawyer/former head of the OCC) to conduct a study of the issue.

The study - "Value-Added Bank Supervision:  A Framework for Safely Fostering Economic Growth" - makes eight recommendations to improve the bank exam process:

  1. Customized Supervision - to fit bank's business model, location, charter, size.
  2. Focus on the "big picture"- risk-based, focused on things which really matter, rather than "gotcha" exercises.
  3. Clarity on Capital requirements - reality-based exams - effective, knowledgeable evaluations.
  4. Stress Testing - as an option to limit account/loan exam reviews.
  5. Risk Management of loan losses - more weight to GAAP practices and Allowance/reserve adequacy.
  6. Experienced Examiners - senior led, balanced depth; too much obvious inexperience.
  7. Cooperation with State Examiners - respect and recognize importance of State regulators and areas of expertise.
  8. Self-Review - assess whether what is preached  centrally is in fact practiced, in a timely, effective, and professional manner.

Sound fair? Reasonable....?

Tuesday, May 17, 2016

About that Loan-to-Share Ratio...

Loan Some ?
Has your loan-to-share ratio plummeted to a new all-time low? Is your expense ratio getting as tight as your teenager's jeans? No problem.  

Here are The Top 5 time-tested, sure-fire strategies for increasing loans, boosting profitability, and assuring your bonus.           

Don't Worry, Be Happy!!

Everyone Qualifies!!
  1. Lower Credit Standards - Just a little, it won't hurt (much)!  Haven't you heard that lending standards have become way too restrictive? Hey babe, low delinquency is out, the life of Riley is in!  "Yes" is a lot easier than "No". Take a walk on the wild side!
  2. Make Fixed Rate Mortgage Loans and Book
    'Em! -
    Drop the paternalism; c'mon stop trying to give borrowers what they need, give 'em what they want. Earnings will be great and you can always spot future rate spikes far enough in advance to sell off the portfolio for a tidy profit.  If you can't predict rates, then of course hire a consultant who can!
    Light a fire under them!
  3. Offer Incentives To Loan Officers - Heck, the more the merrier! You want performance? You gotta pay these days.  Ignore the old fogies who always question why the common good never lies within the range of incentives. You gotta do something to spark a loan officer's interest (particularly their "self" and "conflict of" types.)

  4. Trumpet Credit Cards - Charge! Stop whining about potential cases of bankruptcy - your members aren't worried about it! Why be such a stick-in-the-mud? Credit cards aren't any more dangerous than hand guns.  Whose money is it anyway?
And last, but most certainly not least....

Monday, May 16, 2016

Irrational Efficiency....

Nothing wrong with being wrong, except when you're sure you are right.

No one has ever purposefully selected "crow" from the menu for a next meal; but "stuff" does happen, lettuce does get lodged in teeth, and flies do get left open.  Grace is when someone is kind enough to end your unrealized humiliation by pulling you to the side and saying: "Oh by the way...."

"Oh by the way", we need to talk about

"The Efficiency Ratio".....

The efficiency ratio is a calculation which compares a financial institution's operating costs to its net interest income & non-interest income.  But, before we go any further with all this, let's clarify one thing for the non-CPAs and non-math majors in the audience.....

Sunday, May 15, 2016

The Quack Pack...

 Crayola econometrics...
Quants have been in wide retreat on a broad front after the stark embarrassment of "missing by a mile" ("stochastically" speaking!) to forecast "The Big One" of 2008.

It's kinda hard to "explain away" an econometric failure of "Pearl Harbor" proportion and visibility, especially when the Admiral of the Fleet, Alan Greenspan, comes forth with…

  [Who is that testifying in the middle seat?]
But it's really not all that hard to explain "robusterian" economics in a concise manner; take a listen at the 30 second version from "SNL"

But now, having missed "The Big One", the econometric malingerers are hard at work making sure that they never miss again, especially when it comes to "interest rate risk"(IRR), by living up to the classic economic joke: 

"Did you know that economists have correctly predicted nine of the last five recessions?"

Not of course to mention, the continuing failure of the "au courant" econometric panacea for our national economic malaise - "quantitative easing"(QE) - which some folks believe has become downright comical...

Friday, May 13, 2016

The Empiricals' New Clothes...

The rule of law….?
One of the credit unions with which I have a chance to work received a diktat from Duke Street this Spring requiring the use of risk-based lending.  Some of NCUA's "capital market specialists" had validated through "rigorous and robust" analyses that the use of credit scoring in lending and rate setting was "empirically and statistically accurate".

Snap, Crackle and Pop Analysts !!
(All Puffed Up!)
Evidently using the same modeling skills and analytical techniques developed in overseeing the Corporate system, these NCUA  experts even mentioned sophisticated institutions like Fannie and Freddie ( both currently in conservatorship i.e. - bankrupt!) as examples to follow when formulating "best  practices" lending and pricing .

No I'm not making this up; wish I were....

But, why don't you decide for yourself about the "empirical truth" of risk-based lending theory…..  

Even Though It Is The 13th....


(... and, of course, "TGIFE"!)

[Don't get poached, it's supposed to be a yoke...]

Thursday, May 12, 2016

Rants And Raves...

Pretty Far Out !!
If you would like to keep up with what's going on in "The Real America", can't think of a better way to do so than to regularly read a local, hometown newspaper.  Happen to subscribe to 25 of them from all across North Carolina! You might be a bit surprised and amazed at "all the goings on just outside the city limits".

One of my favorite papers is The Mitchell News-Journal which is in its 86th year of "serving Bakersville, Little Switzerland, Spruce Pine and the rest of beautiful Mitchell County." The Mitchell News-Journal also declares itself to be "The Area's Leading Hometown Newspaper." Certain that last statement is an absolute truth, not only based on the weekly content, but also because The Mitchell News-Journal is the area's only hometown newspaper. But let's not quibble over details...

The best part of the paper is the "Rants and Raves" section, where readers can anonymously comment on those "goings on" in the community and the intelligence level of other commenters ! Here are few examples from last week's edition: 

Wednesday, May 11, 2016

Maureen Dowd on NCUA's Risk-Based Capital Fiasco?

Maureen Dowd is a Pulitzer Prize winning journalist for the New York Times (NYT).  Look what she had to say a few weeks back:

"... a wild west statute where things are getting filled in underneath with a haphazard application of the regulatory process."

Had Ms. Dowd gotten wind of NCUA's new risk-
based capital rule (RBC)... the inconsistency of thought, the mind-boggling missteps, the lapses in rationality, the illusory grip on reality, and the delusional overreach??

Well no, Ms. Dowd was actually writing about the recently enacted....

Tuesday, May 10, 2016

Drawing A Distinction Between Risk And Uncertainty….

The 12 Step Program
for Recovering Robusterians

Step 1: Admit you were silly.
The Wall Street Journal published an interview not too long ago with Andrew Haldane, who is the Director of 
Financial Stability at the Bank of England - not exactly a position of unimportance nor invisibility in global finance!  

Mr. Haldane has worked at Great Britain's equivalent of the Federal Reserve since 1989 and "has become known as one of the world's most innovative thinkers on finance." (Despite that international reputation, his resume does not indicate he has ever worked at the NCUA.)

Not a few credit union leaders are holding their collective breaths as the NCUA bumbles forth into the realms of stress testing, risk-based capital, derivatives, and supplemental capital with unproven techniques and untested regulations, designed to reshape our measurement and management of risk.  

We are confronted with a period of much regulatory uncertainty at NCUA - with competence and capacity an unknown factor.

Here's what Mr. Haldane had to say in the interview about "uncertainty"…. 

Monday, May 09, 2016

Examiners and Other Robusterians Welcome !!!

Come Join Us !

  Refine Your Skills, Advance Your Career, 
Reconfirm Your Self-Importance !! 

The Center For Advanced Hindsight
Where Everyone's Vision Is 20-20 !!!

In the future, you too will be able to...

Sunday, May 08, 2016


Mother's Day, 2016
*  She is great for my booboos. If I didn't live with her it would be a mess.

*  She's the one who tries to keep a roof over my head and pay for all of our power.

*  When me and Mom go to the nail place, we get our feet and nails painted. Sometimes we get the same colors, but we don't all the time.

*  She doesn't care who started it.

*  She likes flawers and she makes the best cupcakes.

*  I love my Mom from head to toe and I know she loves me from the moon and back.

*  My Mother always worries about me.  She has been there since I was a baby and since I was born.

Saturday, May 07, 2016

Responding To Negative Interest Rates...

Roll 'em!
We need to start developing a credit union alternative to the real possibility and threat of "negative rates" on  U.S. consumer savings accounts.  

"Paying" negative savings rates is already happening in several European countries and in Japan. If you think explaining the current low rate environment to members is tough enough already, just wait 'til you have to explain why you are "charging your members" to save with their credit union!

Well, rest easy !  Have given this concern some serious thought and have come up with a new branch concept, which you should be able to implement at your CU locations with little more than some new signage. Here's a look at the new branch branding and a new savings vehicle.... 

Friday, May 06, 2016

Fred Byrd

 Fred Byrd has passed away at the age of 87.  Fred Byrd started out life as one of eight children, son of a hardscrabble sharecropper in rural Hoke County, North Carolina.  The funeral was held Saturday at Rock Springs Missionary Baptist Church - standing room only.

Might say that 70 or 80 years ago in the rural South, that the "odds for success" were not exactly stacked in Fred Byrd's favor; but Fred Byrd was a remarkable man.  Loved by many, admired and respected by all.

Fred Byrd was faithful in his mission in life to his five children, his church, his extended family reunion association, his friends and to his work. Those things Fred touched with his life were always improved; he wasn't always necessarily the leader, but he was always in-charge. The Minister said one of Fred's favorite pastimes was talking.  Fred was plain-spoken and freely shared his thoughts and opinions with others - whether you were ready or not! With Fred Byrd, you didn't have to wonder what he thought or felt. Fred didn't shirk his responsibility "to counsel" you when you needed it. The Minister said Fred even counseled him on his sermons: "Keep it simple and, most importantly, don't take all day!"

Fred Byrd counseled me often over the years; it was always advice well worth getting. I distinctly remember our "first session".... 

Thursday, May 05, 2016

Ann Richardson Suggs...

Been meaning to tell you about Ann Suggs for a while, but things kept happening. Guess this might be a good time.

Ann Suggs was a "one of a kind" personality. Folks said that "God broke the mould" when He made Ann; and most of us were grateful for that.  Because  Ann, all "five foot nothing" of her, was always a force to be reckoned with, a verifiable force of nature - full force, full strength!  Ann only moved in one direction and at one speed - forward and fast.

Ann lost her husband Ray early in her marriage. She was left with two very young sons and an assortment of challenges - all daunting.  She made two choices - forward and fast; balancing rearing Ty and Chris with an exceptional 37 year career " running the money" for one of North Carolina's
largest and fastest growing counties.  Ann Suggs also served with distinction for nearly a quarter century on the Board of Directors of the Local Government FCU in Raleigh, where she fought hard "to give a voice to the people."  

Had a couple of opportunities to watch Ann negotiate the terms of an investment with some of those Wall Street types. Convinced me that, over all those years, the County well-maximized its investment income and that the brokers thoroughly earned their keep.  Ann was not a woman to whom you could say "no" easily.  She explained her world view succinctly: "My way or the highway!" It's kinda embarrassing to admit and hard to explain just how much fear a "five foot nothing" force of nature can strike in one's heart!  But Ann could - and Ann did!!  

Ann was smart, diligent, dedicated, honest and usually right in her decisions.  It was usually wisest "to take Ann's advice" and not try to fight "the force."  I only crossed her once..... 

Tuesday, May 03, 2016

Monday, May 02, 2016

Jumping To Conclusions?

So, you thought "the countdown" was about someone else?

Now, now...

So, Everything Has Now Changed At NCUA... Really ?!?

Chair Debbie Matz has kicked off her shoes and officially stepped aside at NCUA. 

All is now well on Duke Street - right?

Would suggest that if you believe "things have changed at NCUA", you may be confusing "cause and effect". Why do you believe that Ms. Matz was "the problem to be solved" at the NCUA? 

No doubt leaders are ultimately accountable for the performance of their organizations; but, are you giving too much credit or assigning far too much blame for the current reputation of the NCUA to our newly "sent-to-pasture" Chair? 

Are "things" really any better today at the Agency, than they were last Friday?

Actually, Ms. Matz provided a consistent vision of leadership to the NCUA during her tenure as Chair.  To many folks, there was much to criticize about the limited wisdom of her vision and the divisiveness of her leadership style; but let's be fair and give Ms. Matz an "A+" for pursuing her views with a vengeance!

So if Ms. Matz filled her leadership shoes to the
best of her ability, but the national reputation meter for the Agency still rests somewhere between ridicule and contempt; then,where might the problem lie, if its not the "big shoes"?

The underlying problem?