Monday, January 23, 2017

Welcome... and Good-bye!

(The first post...)

This is a blog about credit more, no less.  Perhaps it will provoke a dialogue, perhaps it will just provoke.  The patron saint of this blog is Thomas Paine, a designation with which he would be amused.

Here are the categories:
  • B-words ...observations about our for-profit, four letter f(r)iends.
  • Duke Street ...home of the NCUA.
  • Egosphere ...the leadership odyssey.
  • FOIA ...Freedom of Information Act. A place to look under rocks.
  • FTF ...From the field. The kind of stuff which slips through spell check.
  • Opinion ...yours or mine.
  • Pearls ...wisdom of the ages.
  • People ...profiles, mugshots and eulogies.
  • Risk ...regs, capital, ALM, TDR's, FASB, GAAP, and other dull stuff.
  • Zen ...Aha!! moments.
  • ??? ...a search for answers.

Public comments very welcome, preferably with your name.  All comments will be prudishly screened for language and civility.   Plenty of rant sites already available, let's not do another.  Emails welcome:  Upon your request, more than willing to put forward here publicly, significant questions or to submit FOIA requests on your behalf without attribution.

"Those who expect to reap the blessings of freedom must undergo the fatigue of supporting it."
- Thomas Paine

          ... AND WITH THAT THOUGHT,



Sunday, January 22, 2017

Sunday Morning Coming Down.... Women's March Washington, D.C.


It was early. There was a wet chill in the air.  The streets were still empty...

The Cat's Meow...

She was sitting alone in the Krispy Kreme, with her pink-knitted hat drinking a cup of hot coffee, with a .....

Friday, January 20, 2017

"Common Sense"...

Thomas Paine
The pamphlet "Common Sense" was published in Philadelphia by Thomas Paine on January 10, 1776 - two hundred and thirty-nine  years ago.  "Common Sense" sold over 250,000 copies in the Colonies, which at that time had a total population of about 3 million - equivalent to selling 30 million copies today!  The pamphlet made Thomas Paine America's first 'bestseller' and "Common Sense" went on to be published with equal acclaim throughout Europe.

George Washington, John Adams, Thomas Jefferson - all acknowledged that Paine's "Common Sense" was the deciding factor in turning the tide of public opinion in favor of independence in America.....

Thursday, January 19, 2017

That Alleged Russian Influence....

Great time to be a Russian history major?

The last Russian Czar was partially brought down by the alleged influence of a Russian mystic over his wife, the Czarina. His name was Grigori Rasputin....

Mr. Rasputin !
(Yeow, scary!)

Instant replay...

Alternative Capital In 2017... ?


Wednesday, January 18, 2017

Government of the People….?

Poor government can be

"The penalty good men pay for not being interested in politics is to be governed by men worse than themselves."

- Plato

Tuesday, January 17, 2017

Rants And Raves...

Had about given up on everybody's favorite "Rants and Raves" until a snow storm delayed copy of Spruce Pine's finest newspaper arrived over the weekend.  

The sniping around Mitchell County had grown a
bit dull of late perhaps because the Mitchell-News Journal [link] had a new editor, or November's election shock still had hold, or maybe its just harder to be snide and snarky around Christmas - who knows? But "the quality" - or whatever you call it - of the
repartee was way down! Folks were simply asleep at the squeal! Well, until this one...

*  "Is anyone missing a very unusual pet rabbit  If so, call 828-765-7045. I have it."

Now I must admit that I didn't have the nerve to call that number to find out what was "very unusual" ; but...

Monday, January 16, 2017

All Of God's Children....

"Now is the time to make real the promises
                           of democracy."

"Now is the time to make justice a reality for all of God's children."

          - Martin Luther King, Jr.

Sometimes it's important to...

Sunday, January 15, 2017

Difficult Choices

If you had to choose between drinking wine and being CEO of CUNA, which would you choose?

Saturday, January 14, 2017

Airport Sit-uation.....

Next time you're flying through Chicago, don't miss the airline seat display in O'Hare Airport proclaiming the "greater leg room" a certain airline now provides? 

"Greater leg room" on an airline is, in and of
itself, a pretty peculiar idea.... 'bout as oxymoronic as jumbo shrimp, killed by friendly fire, pretty ugly, cold as hell, educational TV, compassionate conservative, fiscally responsible liberal, honest lawyer, happily married.... robust regulation!

....but nowhere nearly as strange as the folks at the airport who were sitting in the display seats while waiting for their flights!

Why do folks want to practice being uncomfortable....?

Friday, January 13, 2017

Insular, Isolated and (therefore we're all) In Jeopardy...

Fed Annual Reports:  Dealing with
 gloomy forecasts and "uncertainty"...
Was reading the Annual Report of the Federal Reserve Bank of Philadelphia recently.  That's the sort of thing one does on a dreary, overcast day, when you're down with the flu, fevered, somewhat dazed by antibiotics, and lacking the resolve to venture far from the couch or "the facilities" - if you know what I mean. (Otherwise, wouldn't recommend Federal Reserve annual reports to anyone under normal circumstances.)

Found two things of particular interest in the Philly Fed's annual progress report. First, the commentary piece [ "Fiscal Policy and Monetary Policy:  Restoring The Boundaries"] by the President of the Philadelphia Fed, Mr. Charles I. Plosser, is a strikingly thoughtful review of overall Federal Reserve policy since 2008, outlining much concern that The Fed may have dangerously overstepped its monetary mandate and outlining the daunting difficulties ahead. 

The Fed, the Congress, and the Country are at significant risk in trying to unwind the current fiscal "dire straits" in which we now find ourselves.  "Fevered or unfevered", the article is well worth your time - and most fortunately, it's written in intelligent, "non-robust" English and runs just a couple of pages. 

The second point of interest was the wealth of ways the Philly Fed is involved within the Fed district it serves. The annual report prominently marks the numerous sources of advice and feedback the bank has developed to assure it stays informed and attuned to the folks it serves. 

There is a nine member Citizens Advisory Council of which Mr. Plosser says:  "I am grateful for the continued advice and counsel of the nine citizens who serve on the board." There is also an Economic Council composed of leaders from District industry, manufacturers, and non-profits.  The Community Depository Institutions Advisory Council has 12 financial leaders, including two representing credit unions.  And, Mr. Plosser even speaks proudly of the District's representative on the national Federal Advisory Council which meets quarterly with the Chairman and full Federal Reserve Board.  

Yes, even "The Big FED" has several working advisory councils which meet regularly to provide insight, as does the FDIC, as do the Federal Home Loan Banks.  One of the very first initiatives of the brand spanking new CFPB was to create citizen/business advisory groups - in which credit unions were thankfully included.

So, here's Test Question #1:  Name the one federal regulatory agency which hasn't formed any advisory groups to provide periodic advice and counsel?

Thursday, January 12, 2017

Time For A Choice... Or A Complete Change?


The Federal Deposit Insurance Act

Section 1(a) Establishment of Corporation

"There is hereby established a Federal Deposit Insurance Corporation (hereinafter referred to as the "Corporation") which shall insure, as hereinafter provided, the deposits of all banks and savings associations [and credit unions] which are entitled to the benefits of insurance..."

Wouldn't  take a whole lot to....

Wednesday, January 11, 2017

NCUSIF Annual Assessments

NCUA's robusterian capital market folks are always primly proud of their "market savvy" and economic forecasting talents - they view themselves as without peer! And, most folks agree with that assessment! [Sorry to use that word; it just slipped out...]  

Immersed in their interest rate risk bi-polarity and non-maturity share hysterics, these mavens of "make-it-up" encourage credit unions
Never at risk! 
to develop and adopt a similar "strategic vision". But, there is one difference in your strategic planning and theirs - you actually have to live with your results; the robusterians at the NCUA are not challenged with the burden of accountability. You pay for their antics! [Prepare to pay... and pay... and pay again!]

Here's a little matrix you can use to build a recurring NCUSIF assessment into your credit union strategic plan...

Tuesday, January 10, 2017

Why the NCUA Can't Pay Its Bills Going Forward... Without Annual Assessments On Credit Unions.

No way out! Face the music...
... and the assessments!

The NCUA has   cornered a rat ! 

And, that rat  be you!

It's taken a few years of "indiligent" [and, of course, unaccountable, untransparent and perhaps incompetent] planning and management, but the NCUA staff has finally done it - worked us all into a corner!

On November 17, 2016, the NCUA senior staff announced they had run out of ideas - and money! - to an "awestruck" NCUA Board... and that a $300 to $600 million assessment on credit union members would be necessary in 2017 to maintain the targeted 1.30% equity ratio of the NCUSIF. [here's the link] 

What the senior staff evidently didn't tell the NCUA Board - and certainly hasn't mentioned to credit unions - is that additional annual assessments will be required for the next several years - unless NCUA changes "its thinking" - and we all know how "robustly" unlikely that is of happening!

Let me show the simple math on how you know NCUA is getting ready "to move your cheese" on a regular annual basis...

Here are the components of our equation:

#1) The approved 2017 NCUA annual budget: @$300 million.

#2) The % of the $300 million annual NCUA operating budget drawn from (called the overhead transfer rate - the "OTR") the earnings of the NCUSIF: @ 2/3rds or $200 million.

#3) The balance in the NCUSIF: @ $13 billion.

#4) The NCUA staff projected yield on the NCUSIF over the next 3 years: < 2.00%.

#5) Current level of insured shares: @ $1 trillion.

Alright, ready?!? We're going to do the simple math - OK? 

Monday, January 09, 2017

Size Doesn't Matter...

Nice rack!

Least most of us "normal" males hope so!

Probably a good time to stop and address the recurring reader comments which suggest that NCUA's budget should be compared to the budget of the FDIC, based on the asset size of credit unions vs banks examined.

The number of credit unions continues to fall year after year.


The thought being that since the FDIC spends substantially less "per dollar of assets examined" than the NCUA, then the NCUA is obviously "bloated, top-heavy, siloed, and inefficient" [to quote Jim Nussle talking about CUNA - btw, whatever happened with that?.]  

Let me suggest that "size truly doesn't matter" - in fact, size generally doesn't matter at all - in capturing the "risk" profile of a credit union.   Regulators examine to monitor the level of "risk" at an institution, not the volume of assets. Actually, it's pretty clear that the larger the credit union, the less likely the CU is to create a loss for the NCUSIF. The Agency's own data proves that fact:

NCUA Board member Mark McWatters has pointed out on several occasions over the last year, that the vast majority of recent NCUSIF losses have arisen from fraud losses at smaller CUs,
where controls and compliance more frequently break down. But, before we "run off half-cocked", do remember that less than 1% of all credit union assets are in credit unions rated "CAMEL 4&5", less than "safe and sound"

Small and large alike, credit unions pose little risk to the NCUSIF and no risk to the financial fabric of the Nation. But the NCUA is "in a bind" structurally and budget-wise, as the number of credit unions continues to plummet. 

Clearly if NCUA can't  shift the budget dialogue to "asset size = greater risk" then the Agency will have to face the unpleasant task of reducing its budget to reflect the statistical and economic reality that monitoring fewer, larger credit unions in an all electronic, cyber-digital world requires very few staff - and not the staff which the Agency currently employs.

But facing up to the reality that:

Matter Of Fact...

"Things that matter most must never be at the mercy of things that matter least."

- Goethe

Sunday, January 08, 2017

NCUA: Requests For Comments FOIA... Part 7.

Guess while we're looking at NCUA's senior staff presumptuousness with FOIA, might as well look at a classic example of why many folks [like Dennis and Bill] suggest its time for credit unions to ask that the NCUSIF be dissolved and merged into the FDIC. [But of course, let NCUA continue as the federal charter regulator and resize to live off its regulatory fee income.]

Let's go back to the NCUA 2016 Chief FOIA Officer Report which we mentioned in "FOIA... Part 6" [here's the link]. This time take a look at # 7. 
As you will recall, the Chair of NCUA was handed her head in a hand basket at the infamous July, 2015 House Financial Services Committee hearing. Never has a performance by an NCUA official done so much to diminish so profoundly the reputation of the Agency - and all credit unions! The Chair is now gone and credit unions are very fortunate (cross your fingers for the future!) to still be around.

The crux of that hearing was the painfully proved
fact that NCUA - with  NCUA OGC complicity -  inappropriately redacted - using FOIA as an excuse - comments from a PriceWatterhouseCoopers report which simply suggested that NCUA improve its methodology and transparency in calculating the NCUSIF overhead transfer rate (OTR). [That idea was not exactly a "trade secret" to anyone familiar with the Agency!] 

How did NCUA justify substantially redacting that 2011 PWC report?

Saturday, January 07, 2017

NCUA: Request for FOIA Comments... Part 6.




Let me give you an example. Why don't you check out the official 2016 NCUA Chief FOIA Officer Report (for calendar year 2015) [here's the link]. Take a look in particular at item # 4. 

First before we proceed, you should understand three concepts: 1) the FOIA defines eight specific categories of information which are exempt from disclosure - all else should be published[here's the list: see 792.11, particularly #8],  2) the FOIA provides the NCUA with broad discretionary authority to release or not release information even that falls within those eight exemptions, and 3) the FOIA anticipates "the presumption of openness".  

Congress and the President have encouraged the NCUA (and other departments and agencies) to use a "presumption of openness" when considering whether or not to publish information. In other words, the right of the people to know should be paramount. 

NCUA claims to follow this mandate on openness (see # 4 in the Chief Officer's Report): "NCUA follows the Attorney General's FOIA Guidelines encouraging agencies to make discretionary disclosures when information technically falls within an exemption... The Chief FOIA makes the determination if discretionary release is appropriate, after considering the applicable interests and determining the interests served by disclosure outweigh other relevant interests."

Also take a look at the expectations of the U.S. Department of Justice as to how the "presumption of openness" is to be interpreted and implemented; [Here's the link - scroll down to the "Summary"]. Pretty clear - "What can I release?"; ".. not withheld merely because they fall within an exemption"; "... make discretionary releases of records when possible."; "... strive to make partial disclosure." - isn't it?

Do you think the following NCUA FOIA response meets that spirit of
 "presumption of openness"?

... or is simply presumptuous?


Friday, January 06, 2017

NCUA: Requests For Comment On FOIA... Part 5.

Lots of folks believe that reform at the NCUA is a pipe dream, just not possible. But with the prospect of a new Chair, personally I still have great hopes for fundamental, positive changes at the Agency - and soon! The changes required, however, are not incremental tweaks, they are a complete "about face" in terms of [you guessed it!] accountability, competency, and transparency.

In "FOIA... Part 4" offered up an easy test for the current NCUA Board leadership to demonstrate its commitment to a new day at NCUA - simply tell credit unions and the American public what internal changes were made at the Agency to prevent the repeated misuse of FOIA by the NCUA staff  [here's the link] as acknowledged under oath at the House Financial Services Committee on July 23, 2015.

Here's a description from the FDIC leadership of why reestablishing trust at the NCUA is so important. While Mr. Hoenig is chastising our friends over in the banking industry... the same "reputational damage" has occurred - and continues to exist - at the NCUA:

"In a stern critique of the banking industry, FDIC board member Thomas Hoenig said in a recent speech that bankers do not fully appreciate the public's rebuke of the industry.  "It is alarming that some CEOs of some financial firms fail to grasp why they are trusted so little nor appreciate the reputational damage they caused their industry.  
B-oink! B-oink!
They acknowledge very little offense in taking a public subsidy and squandering it in a series of actions that place billions of taxpayer dollars at risk."                                             

Can you think of any  "offensive" billion dollar squandering that has occurred at the NCUA, that has opened them to "public rebuke"

Thursday, January 05, 2017

Rants And Raves…. Hot Off The Press!


Fat chance !

*  Still hoping that the police in Bakersville can step away from the donut box long enough to enforce some traffic laws.

*  God will judge step-mothers.

*  January is National Train Your Dog Month. Just sayin'.

*  When you see a political ad on TV you might as well consider it a lie, it most likely is.

* Crisp's Asphalt Paving Co. - Now Offering Hot Crack Sealing! Free Estimates.

*  If you're gonna be low down enough to steal from other people, try not to let anyone see you.

*  Some of the people who move here think that folks whose families have lived here for years aren't near as smart as them. Well least we were smart enough to get here first.

And the "you'll only find this sort of quality put down moment" in a hometown newspaper...

Wednesday, January 04, 2017

Tuesday, January 03, 2017

NCUA: Requests For Comment on FOIA... Part 4.

Hope you will take a look at the comment submitted on "NCUA FOIA... Part 3" of this series [here's the link], it poses some appropriate questions: "What's the problem with NCUA FOIA? What information are you not receiving that you asked for? Define the issue!"

In response, I would ask you to review the post below, which is a recap of Congressional testimony given by the Chair of NCUA last year on the use of FOIA at the Agency. [simply play the video if you have doubts!] 

"What's the problem with NCUA FOIA?" You mean other than the admitted misuse of FOIA by NCUA, the admitted lack of internal review and controls at NCUA over the use of FOIA, the admitted involvement of the NCUA OGC in the misuse of FOIA, the admitted "cluelessness" of the Board Chair (and presumably the entire NCUA Board) on the misuse of FOIA, and the shaming of the entire credit union movement by the admitted mockery and disdain of FOIA by the NCUA? 

"Define the issue?" The issue is not FOIA; the issue is the NCUA.  And its repeated, egregious lack of...


[The testimony was before the House Financial Services Committee on July 23, 2015]

Oh! Gee! See...
Would someone please ask NCUA's General Counsel (OGC), preferably under oath, why he felt it necessary to redact the Executive Summary of the 2011 PriceWaterhouseCoopers (PWC) study of the Overhead Transfer Rate? Was it bad law or just bad judgment? Assume the OGC agrees with his boss, the NCUA Chair, that he didn't know what he was doing.

Not trying to be harsh. In some important positions, you are entitled to make repeated mistakes. Can't think of any right off hand, but anyway...  Just following up on what Chair Matz told the House Financial Services Committee, under oath. Here take a look for yourself:

[... it starts at @ minute 2:40]

Or here follow the purple duck...

Monday, January 02, 2017

In Full Support of the American Bankers' Association...

"If you act like a bank, you should be treated like a bank."

- the ABA on Credit Unions

Finding that to be a profoundly acute, philosophical statement, I would go further and add...

Sunday, January 01, 2017