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.

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":

Robust Statistics...

"Facts are stubborn things, but statistics are more pliable."

- Mark Twain

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.

Spring....

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         rainbows 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...

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....

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

Speaking Of GAC.... Jekyll Or Hyde?

A) WORDS UNDER OATH...

... BEFORE CONGRESS 2015.

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.

THE ["ROBUST"]* REDACTIONARIES !!!

*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 !!!

WOULD SUGGEST THAT NCUA CONSIDER USING THE FOLLOWING VALUABLE RESOURCE AT THEIR NEXT CONGRESSIONAL SESSION....

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...