Chip Filson
The Seated Boxer, an iconic ancient Greek work of art, shows a grizzled veteran of the ring, equal parts resigned and ready to spring into action.
What I like is a sense of respite from competition, the powerful athletic physique and the tiredness that surrounds his humanity. Is he a winner this day? Are there more fights to go? How will his efforts be remembered?
These are questions that all of us encounter, in literal or figurative ways, in our daily efforts.
Kyiv has declared a day of mourning after Russian missle and drone strikes have killed 24 residents and injured 134. The attacks lasting over 8 hours have left people trapped in the rubble of large residential buildings.. Photo from Kyiv on June 17th.
There has been no White House comment after the most intense. continuing attacks on Kyiv since the initial invasion in 2022.
In the March 1985 issue of Credit Union Magazine, the writer of the monthly Capital Events column raised a critical industry issue following the successful recapitalization of the NCUSIF in January.
The concern was whether a stronger, more efficient, cost-effective NCUSIFcould put the private share insurance options out of business.
One CEO of of a private insurer said No. The changes at the NCUSIF will just lead to healthy competition, and that will be good for everyone.
NCUA believed a strong group of private insurers was a vital industry resource. They saw it as a check and a spur for Agency oversight. “The NCUSIF is where it is today because the private insurers showed what could be done. Without them, the NCUSIF could stagnate and credit unions would be left without a viable alternative,” said Chip Filson, Director of the Office of Programs.
At March 1985 there were 15 state chartered guaranty corporations insuring $15.5 billion or about 17% of total credit union savings. Several pre-date the NCUSIF, but most were chartered in the early 1970’s. They covered about 40% of state charters.
The writer lists events raising the issue of federal deposit insurance sufficiency. These included large bank failures such as Penn Square and Continental Illinois banks, the scrutiny from the Bush Task Force on Financial Regulation and the FHLB’s request for a special $10 billion assessment for the S&L industry’s fund, FSLIC.
Because of the NCUSIF legislation, the credit union insurance options were not the primary concern in DC. However, the NCUA had reached out to the private insurers with an option should there be a public crisis of confidence in deposit insurance. Specifically, the CLF offered a low-cost liquidity line of credit to the 15 insurers collectively. Draws supporting a credit unon which would be collateralized by the credit union’s assets and a joint and several guarantee by all the funds. It would give the private funds the same liquidity options that the CLF had for the NCUSIF.
The article closes with the note that the private fund’s trade group (ISD&GA) was considering the proposal. The writer concludes: How the group responds may prove to be pivotal for credit unions and their insurers in the years ahead.
The insurance group did not take up the CLF’s offer primarily due to the joint and several support commitment for draws by an individual credit union or its insurance fund. The result was that political pressure at the state and federal level forced all but two of the funds to close their doors in subsequent years. These were not financial failures per se, but rather the lack of political support at the state level.
This article some 40 years ago is a case study of an inability to change or in the writer’s words, confident in the management and marketing skills to hold their own in the marketplace without altering the status quo.
Source: Credit Union Magazine, March 1985, oages 17-18, by Brooke Shearer)
I received the following from a credit union CEO reacting to recent examples of mega-mergers. The credit union’s market approach is clear:
From the Credit Union’s Website
Why eat at a local restaurant? Why support your local non-profit? Why help out a neighbor? Simple: you care about your community, get better service from people you know, and want to feel good about the way you spend money. At our credit union, you’re a member, an owner, and a participant in a local, not-for-profit financial cooperative. Our cards look pretty awesome, too.
While I’m saddened by the loss of credit unions in number, I also believe each CU must do what’s right for them. However, because the reasons given for these recent mega-mergers are fairly boilerplate no matter the size, I suspect that $20b won’t be “enough.”
As a CEO of a smaller shop, the thing I find scratchy is the tendency of some larger shops to take an imperialist posture combined with hubris. As they say in parts of the south: You ain’t all that.
During a multi credit union event hosted locally, a rep from a larger shop told one of my star employees, “you know, credit unions your size are going away.”
The thing is, a credit union at $20b is still a smallish bank. In my market, I have BOA, Wells, Chase, etc… Who cares what size you are – just don’t be a jerk.
I think the big shops need to get over themselves and, quite frankly, some little guys need to quit complaining about how hard things are.
My immigrant grandfather opened a restaurant 75 years ago and it’s still going strong. Business has always been tough! When people use that excuse, I always think that the real problem is a leader who can’t rise to the challenge rather than the challenge is too great. Ego won’t allow a leader to admit they might be the problem.
Obviously, merger has also become a retirement plan for many…and that stinks. My goal: when I retire, pass the baton to the next gen…I’d rather have a legacy than a fat payday.
Yesterday I received the picture below from a new Boston resident walking around town exploring the Commons. The plaque was placed in 1959.
It reads in part, Edward Filene (1860-1937): author, scholar, outstanding citizen of Boston and public benefactor. Acknowledged as the founder of the credit union movement in the United States.
Great leaders require two defining characteristics: vision and optimism. Together they produce hope.
From Emily Dickenson:
“Hope is the thing with feathers –
That perches in the soul –
And sings the tune without words –
And never stops – at all …
Carl Sandburg in the midst of the Great Depression wrote of hope in the commonplace scenes of life-1936:
Hope is a tattered flag and a dream of time.
Hope is a heartspun word, the rainbow, the shadblow in white
The evening star inviolable over the coal mines,
The shimmer of northern lights across a bitter winter night,
The blue hills beyond the smoke of the steel works,
The birds who go on singing to their mates in peace, war, peace,
The ten-cent crocus bulb blooming in a used-car salesroom,
The horseshoe over the door, the luckpiece in the pocket,
The kiss and the comforting laugh and resolve—
Hope is an echo, hope ties itself yonder, yonder.
The spring grass showing itself where least expected,
The rolling fluff of white clouds on a changeable sky.
Have a hope-filled weeken
While the administration’s trade policy may have only an indirect impact on credit union fortunes, it is an example of how public policy can become sideways with America’s long term interests. And our standing with the rest of the world.
What follows is a brief critique of the underlying assumptions about tariffs and how the rest of the world will react. The analyst’s point is that poor policy assumptions lead to poor policy outcomes.
Policy is one aspect of the NCUA board’s role. The board no longer exists. Future meetings have been cancelled and/or called tentative.
The board’s statutory role is to manage the agency. That also is on hold.
The consequences of these absences of regulatory oversight will not be known for a while. Meantime some credit unions will take the opportunity to push the envelope on corporate interests.
There will be fallout from this regulatory abdication on policy and agency leadership. Like the trade example below, the market won’t wait to fill the current vacuum in supervision.
The following summary of US trade strategy is by William Reinsch at the Center for Strategic and International Studies *CSIS).
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Had not seen our next door neighbors for a couple of weeks. She updated me about events in their lives while working in the yard. Her father who had been in hospice for almost a year died two weeks ago in Baltimore. That took her away for much of the time.
in this same time frame, after 27 years in her career as a government employee, she agreed to take a voluntary early retirement, She is in her early 50’s and would have preferred to stay in her job. But given the uncertainty and possible legal changes to benefits, she decided to leave.
Poet James Russell Lowell wrote about these life altering decisions in his poem, The Present Crisis. In its musical form as a hymn, it is titled, Once to Every Man and Nation. The opening stanza:
Once to every man and nation comes the moment to decide,
In the strife of Truth with Falsehood, for the good or evil side;
Some great cause, God’s new Messiah, offering each the bloom or blight,
Parts the goats upon the left hand, and the sheep upon the right,
And the choice goes by for ever ‘twixt that darkness and that light.
Lowell wrote the poem as a protest against the Mexican-American war in 1848.
Life happens for all. Sometimes the moral choices are chosen by us. Other times they are thrust upon one by events.
These turning points can shape the rest of our lives. My neighbor is now open to finding a new opportunity to help others, perhaps in non-profit work.
In credit union land, these pivotal events are unfolding daily. NCUA’s leaders are in unchartered territory. Will they step up or step back?
CEO’s are being tempted with buyouts, some sought and others dangled with incentives to transfer their legacy to another CEO’s command. Do I do the right thing, or take the money is an ever-present temptation. And the classic rationale, everybody is doing it makes taking the payoffs seem defensible.
As if the daily industry challenges were not sufficient, all Americans face a growing crisis in democratic governance at the national level.
It is easy to hunker down and just follow distant events on the news. That is not my problem. My attention must be on those things I directly control. One point of Lowell’s poem is that we all have a choice in these moments:
Hast thou chosen, O my people, on whose party thou shalt stand,
Ere the Doom from its worn sandals shakes the dust against our land?
Though the cause of Evil prosper, yet ‘t is Truth alone is strong,
And, albeit she wander outcast now, I see around her throng
Troops of beautiful, tall angels, to enshield her from all wrong.
Importantly, Lowell expresses hope that once engaged, we will make the right choice in these critical moments. Because “amid the market’s din” our “souls” will tell us what is required. Are we up to the multiple challenges confronting us in our personal, professional and public choices?
We see dimly in the Present what is small and what is great,
Slow of faith how weak an arm may turn the iron helm of fate,
But the soul is still oracular; amid the market’s din,
List the ominous stern whisper from the Delphic cave within,—
“They enslave their children’s children who make compromise with sin.”
In our credit union lives and our duty as citizens, we are not living in an era of business as usual. Now is the moment to decide.
I watched CNN’s ive Saturday broadcast of the New York play Good Night, Good Luck. It portrays CBS’s Edward R. Murrow’s challenge to Senataor Joe McCarthy’s political attacks using anti-communist rhetoric.
Set in the early 1950’s the play recreates an era of political name calling not dissimilar to today’s dscourse.
There is a six-minute final address in front of the curtain by George Clooney who plays Murrow. The words are from an actual Murrow broadcast.
It begins questionning whether corporate-owned media(TV is dominant) will support critical discussions in an era of entertainment driven broadcast popularity.
The middle of the “talk” is a collage of quick frames of news clips from the past 70 years interspersed with popular TV shows.
The close is Murrow’s question–not what will politicians do, but rather what are we the people prepared to do?
Here is the final speech from the CNN broadcast. The message is more urgent than ever for our lives, our work places and our country.
(https://www.youtube.com/watch?v=1hU9bWiazGM)
Larry Connell, appointed by President Carter as the first NCUA Board Chairman in 1977, died this past week in New Hampshire.
After graduating from Harvard in 1958 with a BA degree in economics, Connell worked for the Comptroller’s office(OCC) in ban k regulation. During this time he earned his JD degree from Georgetown University.
Connecticut Governor Ella Grasso appointed Connell as Bank Commissioner in 1975. In that office he supervised commercial and savings banks, credit unions, and loan companies as well as acting as securities commissioner.
President Jimmy Carter’s appointment of Connell as Chairman of the National Credit Union Administration (NCUA) came at a pivotal time for both credit unions and federal financial regulation. Congressional legislation converted the NCUA from a single person administrator to an independent federal agency with a three person, Presidentially appointed board.
The same legislation established the Central Liquidity Facility (CLF) within the NCUA. This was the cooperative system’s public-private partnership establishing lender of “unfailing reliability.” At that time credit unions did not have access to the national clearing system or to the Federal Reserve
The first NCUA full board included PA Mack, a senior advisor for Senator Birch Bayh, and Dr. Harold Black an associate professor of finance at the University of North Carolina’s School of Business Administration.
The First NCUA Board in 1979
As NCUA chair Connell was also a member of the Depository Institutions Deregulation Committee (DIDC) which was charged with the deregulation of rates and terms on the savings accounts of all federally insured deposits. He was Chairman of the new congressionally chartered National Consumer Cooperative Bank (NCB) until his departure from NCUA in early 1982.
In March 1979 Congress established the Federal Financial Institutions Examination Council (FFIEC) to bring consistency to multiple regulators’ oversight of rules and call reports. Connell was vice chair. That same year he asked if I would serve as the state representative for credit unions. The term was for two years and included periodic visits to Washington for state liaison meetings. The primary discussions were about the wording for the new Truth in Lending and Truth in Savings rules.
After leaving NCUA, Larry became President/CEO of the $2.5 billion Washington Mutual Savings Bank in Seattle. This began a peripatetic 12-year career in bank crisis management as CEO or Director for banks and S&L’s across the country from Washington, Texas, New Hampshire, Maine, Illinois, Michigan and Washington DC.
After his work for domestic inistitutions Connell was deployed as Senior Advisor for the U.S. Treasury Department’s Office of Technical Assistance. In this role he advised governments on bank privatization policies and practices in eastern and central Europe, as well as in Russia, Turkey, Colombia, South East Asia and Africa.
October 1981 welcome reception for Ed Callahan with P.A. Mack and Larry Connell
Larry was at the founding of the NCUA as the agency transformed to an independent board. At his departure his successor, Ed Callahan, spoke of his vital contribution:
While Larry Connell’s departure will be a major loss to NCUA and to the credit union movement, his visionary ideas will continue to influence the financial community. Larry’s expertise in so many areas–economics, law and banking–helped to elevate the stature of NCUA during one of the watershed periods in American financial history.
An ever expanding group of people—from government, industry and the media—now actively seek the Agency’s views on a variety of economic and financial matters, not just credit union affairs. I can’t pay him a higher compliment. (The NCUA Review February 1982, page 1)
However Larry did continue serving credit unions. He was an original trustee of the TCU family of Mutual Funds launched in 1988 by Callahan & Associates.
Larry laid the foundation for responsive, experienced, and professional NCUA leadership. He believed in credit unions as a vital alternative for individuals and communities left behind by the for-profit sector. He was a friend, a colleague and always open for intelligent conversation.
The NCUA Board’s leadership and support of credit unions.
For the anniversary of D-Day. Written in 1942 by Irving Berlin, I Paid my Income Tax Today supported the country’s income tax collection efforts during World War II.
The rights are stilll owned by the Internal Revenue Service which distributed the song widely on its publication.
Proclaiming the patriotic virtues of paying taxes, this zippy little tune makes being “squared up with the USA” sound positively delightful. Clearly, the national dialogue surrounding taxes, especially in credit unions, has gone in a different direction.
(https://www.youtube.com/watch?v=IIT3xnYbmzQ&t=8s)
The Lion Sleeps Tonight (Wimoweh)
To spark your day. The Young People’s Chorus of New York City sing at the Lincoln Center in 2021. These are the future of the country. Feel the joy and see the promise. I love the conductor’s enthusiasm.
(https://www.youtube.com/watch?v=erCq44KSEHQ)
How Can I keep from Singing
Performed at the 16th Annual Anabaptist Choral Festival 2023 of Shenandoah Christian Music Camp (VA).
The choir covers their faces to represent the text which speaks of darkness closing in around us: “What though the tempest loudly roars, I hear the truth, it liveth! What though the darkness ’round me close, Songs in the night it giveth.”
And the words of hope: I hear tne bells of freedom ringing; how can I keep from singing?
(https://www.youtube.com/watch?v=Cw-ycev482k&t=9s)
On May 22, the NCUA held its first public board meeting with its one and only member, Chairman Hauptman, overseeing staff reports.
This was the first public meeting since February, where the only agenda item then was the NCUSIF update. Both March meetings were closed. The March 27 and April 17 open meetings were cancelled. On April 16 President Trump fired the two democratic board members. That event is now being challenged in court with no specific timetable for resolution.
At the meeting’s conclusion Chairman Hauptman assured the public that NCUA was fully capable of meeting its statutory responsibilities. He repeated the message from an earlier NCUA press release on April 18:
Please be assured that the NCUA has precedent and standing delegations of authority in place to continue performing all operational and statutory requirements under the authority of a single Board Member.
During the Bush Administration (2001–2002), Chairman Dennis Dollar acted as a sole Board Member. He held a Board meeting, voted, and took several actions, both administrative and operational.
However the circumstances between these two situations is entirely different. In 2002, both nominees filling the expired terms were known and required only Senate confirmation. That happened very quickly in March. This time, confirmed nominees have been fired creating two “vacancies.” These two board members are challenging the President’s removal in court.
Chairman Dollar held only one board meeting in which he received an NCUSIF briefings and then tabled three other actions until a full board was in place.
Moreover, in a May 25, 2005 Delegation GEN 5 update by General Counsel Bob Fenner, all delegations of Authority in the final paragraph is subject to the phrase “In a state of national emergency, all authorities retained by the board are delegated to . . .” Are we-NCUA- in a state of national emergency?
Hauptman’s situation is unique in how the vacancies occurred, the seemingly open-ended time period for single leadership, the dramatic internal staff and reorganizations underway, and the uncertain legal status of the fired members-especially if returned to their positions.
The publc format of the March financial NCUSIF update was changed. A series of “dashboard” charts showing five-year trends for key balance sheet and performance ratops was unveiled.
These presentations provided interactive “eye-candy” but no increased transparency for how critical numbers such as the increase in loss reserves of $5.4 million were calculated. The loss reserves to insured shares ratio far exceeds the long term loss rate on insured savings.
Most importantly while reporting zero losses in the first quarter, there was complete silence on the recent liquidation of the $ 47 million Unilever FCU. This was finished in such haste that there was no conservatorship or apparent effort to find a willing merger partner. The situation echoes the $13 million unexplained loss (20% of assets) at the $65 million Creighton FCU in mid 2024.
The most important issue, the underperformance of the NCUSIF portfolio, was documented in the new dashboard slide Portfolio Performance. It shows the NCUSIF’s return has trailed significantly the 90 -day T bill rate since mid 2022. The year-to-date yield in the first quarter of 2.59% is significantly below the overnight return as well.
NCUA CFO Schied said staff’s policy was to continue the investment ladder out as long as ten years in order to ensure “a steady fund income.” This ladder generates “steady income” that has trailed market returns by over 2.0% or more as shown in the bottom graph for over three years.
There was no reference to either interest rate risk (IRR)or ALM, the two basic factors in managing any portfolio. Especially one which cannot be adjusted once invested. There is an obvious need for better policy and experienced investment management.
Chairman Hauptman likes to describe NCUA as an “insurance company.” It would be helpful if there was much more transparency and thoughtful discussion about how this “company” manages its $23 billion asset on behalf of credit unions. This underperformance damanges both the fund’s finances and credit union’s returns.
The staff stated that the voluntary layoff program had been agreed to in the March 21 closed full board meeting. By the May meeting the employee responses were known.
A total of 250 employees elected to leave voluntarily. There were no forced departures. Almost all will be placed immediately on administrative leave with full pay and benefits but doing no work. This paid leave status extends until December 31, 2025. This means most of these departing employees will be paid in full while not contributing for at least six months orlonger.
To incentivize the two options, there was a $50,000 bonus provided to each participant. In addition, all will receive their 2025 merit bonus which will average $15K for junior staff and from $29K-$42K for senior staff.
In addition Hauptman announced there would be no restrictions on these employees’ future employment so they might find another job while on leave. He commented, “They might even be paid more than what they earned at NCUA.”
As explained by Executive Director Larry Fazio, the program was designed by the staff for the staff. There will be no budget savings for 2025. The special severamce benefits will fully utilize the NCUA’s operating funds for this year. The estimated total of $75 million in potential “savings” means the average cost for the 250 departures was $300,000 each.
Staff was ambivalent about whether there will actually be anything close to these savings in 2026. The gross cost of $75 million paid departing employees will be offset by new contracts, salary increases, new hires, technology investments and other expenditures setting up a new future state for the Agency. In other words any savings are yet to be determined. And the generous terms of the 2025 voluntary departures will leave no surplus from the current year.
There were no specifics provided for how NCUA’s future organzarion will be structured. No departments closed or consolidated, no programs (eg. consumer exams, DEI conferences, etc) to be reduced. No reference to any DOGE recommendations for eliminating unnecessary expenses.
There ws one specific example of change however. Thiswas to extend the time between on-site exams based on a credit union’s net worth. For credit unions $1-15 billion in assets, the exam interval would be from 12 to 18 months. For less than $1 billion, the period between field contacts would be 14 to 24 months.
This one concrete step will reduce the agency’s in person safety and soundness exams as long as the net worth seems sufficient-above 10%. This first line of defense for the NCUSIF is being weakened at a time when the sudden falures of Unilever and Creighton FCUs are still unexplained.
Thia is not a business as usual moment in this era of single board leadership. This circumstance is exacerbated by the fact that Chairman Hauptman’s term expires in August of this year. What happens then? An acting Chair? Who designs and follows through on NCUA’s future state? Staff whose 25% voluntary separations outcome used up this enire year’s budget?
In a March 3, 2025 CUSO Magazine article, Hauptman’s agnostic approach to the future of credit unions was presented:
On the topic of the NCUA’s future, Hauptman declined to speculate or advocate for one outcome or another, noting that while he does not shy away from controversial topics, he keeps himself from getting into debates when he has no authority over the outcome. The fate of the NCUA, he argues, is outside his control and lies in the hands of Congress and the White House.
Congress created the NCUA in 1970, and there were 27,000 credit unions operating before then…my only view on it is that it is important for people to understand that credit unions are different. So whoever in the future is going to be regulating needs to be aware of this.”
In an April 23, 2025 memo to All NCUA Staff, Hauptman wrote in part: NCUA will be returning to the headcount that it had a few years back—but be assured we know it takes teamwork and creativity to “land the plane safely.” And NCUA is doing that quite well thus far.”
The outcome from the first solo board meeting since 2002 suggests that there is still a great deal of turbulence. It is not clear who is piloting the plane or where it is trying to land.
This first flyby of the pubic landing zone with credit unions leaves more questions than answers. The future of NCUA with its implications for credit unions and their 100 million members seems at best cloudy.