To ensure a safe Thanksgiving, my wife and I lined up Friday night for our Covid tests at the county recreation center. The test was free. The line took about an hour. Everyone stood six feet apart as the temperature got cooler as night came.
We were given clipboards to complete our registration—name, email, age, race. One of the staff helping with sign ins came by to ask the obligatory questions. Have you had any Covid symptoms? Been around anyone who has tested positive?
It was the last question that was memorable, however. She qualified it by saying “I think I know the answer, but I have to ask anyway. Are you pregnant?”
An NCUA Exam Risk Rating
The predictable routine of bureaucracy is an important factor in performance. We rely on formulaic responses especially by those in authority. But it can also result in actions that contradict common sense.
In a conversation with a CEO about how to respond to his most recent exam, this same anomaly was present.
The credit union has been a CAMEL 1 for almost two decades. It has navigated the pandemic with improving performance. Liquidity is 500% the policy minimum, delinquency is down and most loans in forbearance are back making payments. ROA and net worth are way above peer averages. A consistent track record of exceptional performance in the present and the past, through thick and thin.
So, I asked given these documented facts why the risk rating for “credit” and “liquidity” were judged “moderate” versus the “low” ranking on every other factor. The CEO’s observation was “It feels like we are being punished for what could happen in the future.”
The Culture of Bureaucracy
This is the difficulty with bureaucratic culture. When facts don’t fit a program’s priorities, the instinct is to assert future scenarios that do. This tendency is not limited to examiners. Listening to last week’s NCUA board meeting, two members confidently predicted the future financial downturn of credit unions in 2021 and with it, the necessity of collecting more money for the NCUSIF. This was after the staff updated the distribution of CAMEL ratings that showed the continuing reduction in code 4 and 5 classifications in both total assets and number of credit unions.
Facts will not deter the inevitable government instinct to always seek more money. This prediction of future NCUSIF premiums reflects a bureaucratic mindset similar to asking all males if they are pregnant.
After getting our Covid tests, we walked out by the admin line and everyone wished me a safe pregnancy. For I had answered yes to the question. We all enjoyed the humor of this bureaucratic incongruity.
Common sense, humor and a negative test. Good ingredients for a safe 2020 Thanksgiving. For it is my hunch that 2021 could be the best year credit unions and their members have ever enjoyed.