Thursday, December 08, 2016

The NCUA Budget; Easy Money...Part 7

Y'know, still haven't heard back officially from the NCUA about improving the earnings of the NCUSIF by $100 million next year, but it's the holiday season and... well, everyone's really busy this time of year.

And, then again it is only $100 million or so... not even close to being enough to buy a new Air Force One, so what's the rush? Well, here are a couple of reasons for a little urgency at the NCUA Board level.

As previously mentioned, the robusterian elves
"ROB-bery in UST-reasuries"
"ROBUST !!!"
 at NCUA (bet those pointy little hats fit very snugly on those pointy little heads!) purchased $800 million in 9 and 10 year treasury bonds with your NCUSIF deposits in the last 90 days - according to the last published NCUSIF financial statements (October, 31 2016) [here's the link].

Take a look at the $800 million of investment purchases made by the elves with your NCUSIF deposits...

Purchase Date    $Amount    Maturity Date   Yield at Purchase

    8/1/2016           $200 mil         2/15/2026          1.49%

    8/19/2016         $ 50 mil.         8/15/2026          1.59%
    8/31/2016         $200 mil.        8/15/2026          1.57%
    9/30/2016         $100 mil.        8/15/2026          1.59%
  10/18/2016         $150 mil.       11/15/2025         1.73%
  10/31/2016         $100 mil.        5/15/2025          1.76%
                           $800 million

As we've discussed, interest rates have started to rise in the market as the Federal Reserve Board has been doing everything but promise [the Fed Chair has been yellin'!] to raise rates at its meeting in December [next week!].
"You did what?!"
 "Long term treasuries - OMG?!?"

And, as you know, when interest rates rise, bond prices (what you paid for them!) go down. And, of course, the longer the term of the bond, the greater the decline in value! That's why most prudent investors do not buy long-term bonds when rates seem assured to rise!

So, as you might suspect, the $800 million in long-term treasury bonds purchased recently by NCUA's robusterian elves have declined somewhat in value.

Want to guess what the $800 million in bonds are worth now...

$750 million ! 

That's right, those bonds have already declined by $50 million in value [actually, it's precisely $49,749,392.29 as of 12/7/2016]...

... and that's before the Federal Reserve meets next week!


[Now, granted $50 million isn't even a down-payment on an Air Force One,
 but it's still "real money" to CU folks!]

Hey guys really, it's time to... (you guessed it!)... ACT!


Anonymous said...

Re-visiting A C T.

Transparency is the one part of ACT that requires intent only. T requires only that the individual person or agency says, essentially, "we have nothing to lose nor hide, they need the information and/or deserve to know ".

Accountability and competence rely on transparency in order to achieve a 1 when one other ingredient is present.
Which is why your acronym is missing a letter.
When this letter is added to the front of ACT, we THEN get the full picture!
THAT letter, at the front of ACT also represents what is missing or present when there is full transparency.
It's what's missing in media these days and is missing in government and NCUA.

Well, first NCUA has to want FEEDBACK.

THe "listening" tours for the corporate legacy asset cataclysm and the town hall listening tours for RBC, were listening AS AN ACT, not FOR ACT.
Transparency shows FACTS which begets Feedback, which increases Accountability which improves Competence (performance).

There ain't no game films being watched in Alexandria.
That's why there WIL BE more assessments.
Cause no one can do a loss share on the medallion loans remaining and if a CU does, their members should remove the board and CEO.

just the FACTS please, we are smart enough to hear them and decide.
Absent that, we don't trust.

Jim Blaine said...

O-o-o-h that's a great comment... FACTS!

For the pre-millennial readers, going to have to post a clip of "Joe Friday" saying: "Just the facts, m'am. Just the facts."

You'll only get the reference if you were alive in an era when TV had only 3 channels.