Saturday, November 26, 2016

NCUA: An Agency at the Crossroads...

We have been talking over the last few days about
Change must start at the top....
change at NCUA.  If change is needed at the agency, think we all recognize significant, serious change must come "from the top" - from the NCUA Board. 

The NCUA Board approved the "new" five year  "Strategic Plan" for the agency in September.  

Look to see if you believe the new, proposed NCUA Strategic Plan is a serious document - for it is the Board's plan. [here's the link - page 12]

Thought you might like to also consider a few excerpts from a recent opinion piece in the American Banker Magazine. The writer is Richard J. Parsons, a former BOA exec:

"When a bank fails and the resulting loss to the FDIC crosses a certain threshold, regulators are required to write a material loss report (MLR), explaining why the bank in fact failed. Well over 100 such MLR's have been written in the past few years."

"... the banks' examiners almost without exception gave these institutions good to excellent CAMELS ratings nearly right up until the point of failure."

"Start all the way back at 1979 - the year the CAMELS system was developed - and the total number of bank and savings and loan failures is now north of 3,400 institutions, including 470 that have failed since 2008.  The evidence of more than 3,400 failed banks and the ratings these institutions received shortly before folding simply overwhelms any defense of the usefulness of CAMELS."

"This isn't a matter of implementation or execution. The problem is the system itself... 

The U.S. needs a new, 21st century model for identifying, monitoring and reporting risk. It should be transparent to bankers, depositors, and investors in bank equity and debt.  The new model should be based on objective measures."

But Mr. Parsons suggests a solution...

"We clearly need a process that takes all of this into account, to replace what we have now in CAMELS.  Bankers and regulators should take the initiative and collaborate in designing it."

Wouldn't it be exciting if we had a "New NCUA" with leadership interested in sitting down with credit unions to collaborate on a new future? Credit unions and NCUA shouldn't continue to miss these opportunities to differentiate ourselves...

Why wait?

But we probably will miss yet again because this year's NCUA Strategic Plan did not "start at the top"... so would you expect a "new vision"?

Could we start next year's plan now?



Anonymous said...

NCUA has been a separate, independent regulator for over 30 years and has failed.
NCUA will not collaborate as you and Mr.Paraon describe.
What should they?
They have all the power.
When, in the history of man, has one in power volunteered to give up some of the power?
NCUA, like CUNA and nafcu, are past their sell by date.
Incapable of self correcting.

We are waiting on congress.
And when they show up, it won't be to maintain NCUA independence.

William Brooks said...

Actually, George Washington voluntarily gave up the Presidency.

Financial institutions being rated good just before they go bad is a function more of the fact that examinations are not designed to be predictive. The corporates were doing fine right up to the point that the stuff hit the fan. Who would have thought?

Anonymous said...

"The corporates were doing fine right up until the --hit the fan"
What an alarmingly ignorant statement.
Like saying the titanic was doing fine until it hit the iceberg.

What happened to ignoring the warnings of icebergs and advice to slow down?

Yes, that'd be the same as NCUA ignoring warnings from GAO and the US Treasury (and common sense) that the corporates had :
Serious governance issues.
We're investing in bonds they didn't truly understand (and over concentrating in them).
That specialists should be hired to help examiners in dealing with the corporates bc the examiners didn't understand the bonds.
That the whole thing got stupid when NCUA thought the way to "consolidate" the number of corporates was to open up their field of memberships so that the big could overwhelm the small and the merger them (their idiocy of this is a short novel of stupidity and hubris).
All you have to do is look it up or listen to advisors who aren't from CUNA and nafcu to know that this disaster was avoidable.
And, we paid for the result in assessments and 23% legal fees.
William, stop trying to be so smart and try to become a little more informed.
If it's not too late.
Short of that, NCUA has to be dealt with, as they will not correct themselves.
They're just protecting power like CUNA.

Anonymous said...

Unfortunately the same morons at NCUA have clones at the trades, especially CUNA. NCUA missed the corporate debacle as the examiners were out golfing with the CEOs and leadership of the corporates and turned a blind eye to the risk (and no one at NCUA got fired). In turn, CUNA missed it too as their leadership served on the boards of all the corporates; and they of course enjoyed their monthly expensive dinners, five star resort golfing trips and high-end cruises, so they of course turned a blind eye. Then you have CUNA's chief economist Bill Hampel who had our trades invest in the corporates including the Defense Credit Union Council, where they both lost millions (and no one got fired at CUNA). There is NO accountability at NCUA or its anagram, CUNA. Clean house!