Halloween from Poets E. E. Cummings and Robert Frost

Chansons Innocentes II 

by E. E. Cummings

hist     whist
little ghostthings

little twitchy
witches and tingling
hob-a-nob     hob-a-nob

little hoppy happy
toad in tweeds
little itchy mousies

with scuttling
eyes     rustle and run     and

whisk     look out for the old woman
with the wart on her nose
what she’ll do to yer
nobody knows

for she knows the devil     ooch
the devil     ouch
the devil
ach     the great



Note: The poem “celebrates country folk superstitions of All Hallow’s Eve or All Soul’s Day, when ‘witches and tingling / goblins,’ ‘little ghostthings,’ and other spirits of the dead make their appearance. The poem is written as a child feels in the midst of these ideas, stories, and legends of old age, death, and the supernatural; much of the diction is in child language. [. . .] [L]little creatures from another world are ‘scuttling,’ running, and hiding, creatures that are strange and fearful to a child, yet also described as childlike in character. [. . .]

Cummings never lets us feel too sad about death. The suggestion is that we should do as children do: feel old age and death in our midst for only a brief moment, and then go back to playing. Cummings reaffirms the joy of life that is always in process, and even imagines the spirits of the dead continuing this fun, the way a child might imagine it, for, after all, it is a green, innocent devil that is depicted dancing.”

Source:  R. A. Buck, professor of English at Eastern Illinois University published  in Spring: The Journal of the E. E. Cummings Society, no. 18 (October, 2011)

In a Disused Graveyard

by Robert Frost

The living come with grassy tread
To read the gravestones on the hill;
The graveyard draws the living still,
But never any more the dead.

The verses in it say and say:
“The ones who living come today
To read the stones and go away
Tomorrow dead will come to stay.”

So sure of death the marbles rhyme,
Yet can’t help marking all the time
How no one dead will seem to come.
What is it men are shrinking from?

It would be easy to be clever
And tell the stones: Men hate to die
And have stopped dying now forever.
I think they would believe the lie.

Note: Sandra L. Katz, professor emerita of English at the University of Hartford, writes, “The speaker decides to tell the stones that the reasons why the graveyard is ‘disused’ is that ‘Men hate to die / And have stopped dying now forever.’ The persona is playing a joke on the stone, but one that we—perhaps foolishly—wish were true.”

Wisdom: Running Lean

           On Running Lean

I started my career as a football coach. Something you learn from coaching is that people can do more than they think they can.   They can be faster, work harder and do more than they thought possible when they got up in the morning.

“When I arrived at Patelco, I reviewed the numbers.  The credit union was sending 10% of income to reserves and returning 4-5% to members as dividends.  Patelco was bloated and did not know it.

“I set a new goal: 10% to reserves 28% to expenses and 62% back to the members,  To get that 10-28-62, everyone had to work leaner and better.  Nothing was considered sacred.” (pgs 22-23)

Note: The Coach’s Playbook is a brief collection of the thoughts of Ed Callahan over his 30 plus years in credit unions. The book was published in 2006 by the Member Value Network.

More Wisdom . . .

                     On Lending 

“The backbone of a credit union is lending.  You blow the whole thing if you make too many mistakes here.  Think back over the past 80 years of credit union history in America.  Consider the outstanding credit unions.   What sets them apart?  I believe it is their lending programs. In the long run, the rise or fall of a credit union depends on the loans it makes.” (pg15)


Note: The Coach’s Playbook is a collection of observations by Ed Callahan.  They are from his three decade career as a regulator (including Chairman of NCUA 1981-1985), co-founder of Callahan & Associates, and as CEO of Patelco.   The book was published in 2006 by the Member Value Network.

Wisdom from The Coach’s Playbook

                  On Members

” Most economic institutions exist for the capitalists, who are a tiny minority compared with the body of customers.   In such an economic system as now exists around the world, people do not come first.  Money does.

Credit unions are different and always have been. We never came together with notion of making money, but with the notion of helping people and improving their lives.” (pg. 7)


Note: The Coach’s Playbook is a short collection  of Ed Callahan’s observations.  These were collected from his writings and talks working in credit unions:  eight years as a regulator  (including Chairman of NCUA from 1981-1985), co-founder of Callahan & Associates, and as CEO of Patelco.   The book was published in 2006 by Member Value Network, a spontaneous “collection” of credit union leaders and consultants.

Government and Investment Portfolio Management

In a Marketplace analysis yesterday, the daily financial update reported how the Federal Reserve’s management of its multi-trillion dollar portfolio can reduce or increase the government’s overall operating deficit.

As reported, for the last 15 years the Fed’s been making about $100 billion a year a profit sent right to the Treasury which, as revenue, reduces the federal deficit.

The “profit” comes from the net spread between what the Fed earns on the trillions of  bonds and mortgage-backed securities that it began purchasing during the financial crisis of 2008 under the policy of “quantitative easing.”

This macro economic policy continued and expanded during the Covid shutdown.   The cost to carry these interest earning assets in the Covid era was near zero.  The majority of funding was from the excess reserves banks kept with the Fed which was paying less than 1%.

Today that spread is upside down as the cost of funds has risen to nearly 5.5% on overnights.  Rates on the portfolio are mostly fixed and at much lower yields as securities were purchased in a much different part of the interest rate cycle. Interest expense is now greater than interest income with the result that “the Fed has lost on the order of $100 billion since last fall,”

Here are the Fed’s total balance sheet holdings as of October 18, 2023 showing almost $8 trillion in total assets.  Tables show that the majority of assets have maturities beyond ten years.

When the Fed has a loss, it files the loss away until it can pay it back once it’s making a profit again. This year’s “loss” will equal about 5% of the total government deficit.  So instead of lowering the shortfall as in prior years, it adds to it.

The NCUSIF Analogy

The largest asset managed by the NCUA is the NCUSIF’s $22 billion investment portfolio.  As of August 30, $4 billion was invested overnight with a yield of 5.4%.  The remaining $18 billion was invested in maturities as long as seven years with a combined yield of 1.4%.

At month end the portfolio’s market value was $1.5 billion less than book.  As short term investments become a greater portion of the total, the duration has declined slightly to 2.64 years.  This is the approximate time that it would take the cash flows from the maturing investments to be at  market–should the current yield environment become the new “normal.”

If the NCUSIF’s portfolio yield were 5% or greater, the fund’s total revenue would exceed $1 billion. This would result in dividends to the fund’s credit union owners. When the portfolio is below market for an extended period this shortfall comes out of credit unions’ pockets.

Time for Credit Unions to Be Alert

It will be critical for credit unions to monitor the monthly updates of the fund. The Agency’s upcoming investment decisions are critical. Its interest rate risk management and duration will  have a critical impact on the Fund’s future.  This includes total revenue, its financial soundness and credit unions’ bottom lines.

Children on the Front Lines of Change

I was sent the following article, The Civil Rights Showdown Nobody Remembers, prior to a reunion.

It is by Louis Menand, published in the New Yorker, July 31, 2023 and in the print edition on August 7 under the title “The Children’s Crusade”

The Supreme Court and Civil Rights:  Separate is Not Equal

Clinton High School, Clinton TN was the first southern school to be integrated by court order in 1956.  This 15-page New Yorker story describes the event.   This initial case is sometimes  overlooked because of the subsequent much publicized Federal Government’s  intervention in Little Rock’s Central High School. In that situation,  President Eisenhower sent in the 101 st Airborne to support the Court’s integration mandate after Governor Faubus called out the Arkansas National Guard to prevent it.

The excerpt below is the final paragraphs which  provide the significance of this first integration effort. The event was seminal. The author’s portrayal  of how children, not grownups, were  on the front line again and again is his most crucial observation.

Sometimes change in society must be led by the most vulnerable.   Political rhetoric,  governmental orders and passionate ideals can be inspiring.  But who does the heavy lifting?

The Author’s Conclusion

This brings us to the real scandal of (the Court’s school desegregation decision in) Brown. The Supreme Court finally interpreted the equal-protection clause of the Fourteenth Amendment as it had been intended: to protect Black Americans from state-ordered discrimination. The Court was not wrong when it held public-school  segregation laws unconstitutional.

But its decision placed the burden of desegregation—not just some of the burden, the entire burden—on children. Schoolchildren, both white and Black, were required (few volunteered) to do something that no adult was required to do. Socialized since birth to avoid unnecessary contact with the other race, they were suddenly expected to handle a situation that their parents, outside of military service, had never been asked to handle.

Labor unions and police forces and fire companies were not required to integrate in 1954. Restaurants and hotels and theaters were not required to integrate. Places of business were not required to integrate. Water fountains and bus stations and city parks were not required to integrate. Only public schools were required to integrate.

Clinton High School had eight hundred students. It was insane to send twelve Black teen-agers in there while demonstrators screamed abuse outside and there was not a single Black teacher in the building. It was insane to send nine Black teen-agers into Central High School in Little Rock with eighteen hundred white students and no Black teachers. It was insane to ask one Black adolescent, fifteen-year-old Dorothy Counts, to walk a gantlet of taunting whites so that she could single-handedly integrate Harry P. Harding High School, in Charlotte, North Carolina.

Desegregation was a war. We sent children off to fight it. 

This story causes one to ask, what are today’s children fighting for?

Credit Unions and Public Banks  

On September 18, 2023 an organizing group Friends of the Public Bank of the East Bay  (PBEB) announced the hiring of a its start-up CEO, Scott Waite.   This is a brief announcement by Waite on YouTube.

Waite is a credit union veteran having served over 20 years as Patelco Credit Union’s  CEO.  More recently he had turned around Central State Credit Union which had been operating for four years under regulatory constraints.

PBEB has raised $1 million and is undertaking further fund raising.  Four local jurisdictions – Alameda County and the cities of Richmond, Oakland and Berkeley – are supporting the effort contributing financially to the bank’s groundwork and business plan.

The intent is to seek a bank charter with FDIC insurance to open by 2024 or early 2025. The goal is to facilitate local governments’ reinvestments back into their communities. As a wholesale bank, PBEB will partner with community banks, credit unions and CDFIs to finance affordable housing development, small businesses, the renovation and electrification of existing buildings, and the ability of cities and counties to refinance their municipal debt locally.

More Efforts Underway

On September 29, the online reporting site, Next City, posted a summary of the history of public banking and the growing interest in major cities across the US.

A Victory For Public Banking

A public bank in California’s East Bay is gaining more momentum to become one of the first public banks to start operating since the state-owned Bank of North Dakota got established in 1919. It is the first public bank to hire a CEO in the last 100 years.  Interest in establishing public banks has grown significantly in the last decade but many organizers continue the long push to get one created in their cities.

In an earlier article Next City described efforts of mayoral candidates in Chicago and Philadelphia to make public banks part of their electoral initiatives.

Organizers in New York also want to create a city-owned wholesale bank which was the subject on an article in Credit Union Times, Public Banks: An Important Idea Whose time is Overdue. 

The author, Melissa Marquez, CEO of the $37.7 million CDFI Genesee Co-op FCU, pointed out the public banks are not competition but “would partner with us to increase our capacity to lend, grow and meet our communities’ needs. This partnership model is effective precisely because it leverages the proven expertise of local lenders and the scale of public deposits.”

She pointed to the century long record of the Bank of North Dakota, a public bank with over $10 billion in assets.   From its 2022 Annual Report:

BND had “a record $5.4 billion in loans to the state’s farmers and ranchers, business owners and students in North Dakota and record profit  of $191.2 million in 2022, up $47 million from 2021.”

Her article  cited statistics from the Institute for Local Self Reliance that  “the Bank of North Dakota has fostered the highest rate of community banks and credit unions per capita in the country.

She added: The New York Public Banking Act (S.1754/A.3352) would create an appropriate regulatory framework for enabling localities, such as Rochester or New York City, to apply for a special purpose charter for a municipal public bank. They will be charter-bound to reinvest in equitable economic development in low-income communities.“

The article also cites the history of the CDFI programs as a model for a new, locally focused financial institution system:

“30 years ago, the federal CDFI Fund was established during the Clinton Administration as a part of the U.S. Treasury. There were naysayers and name-callers then as well. But three decades later, thousands of successful CDFIs are operating in urban, rural and native communities across the country, and CDFIs enjoy broad public support across political and other divides.”

Why Public Banking Could Take Off

Scott Waite explained his decision to lead the PBEB as a “grass roots movement meeting the moment.”  The bank will partner with other institutions to ensure public funds are reinvested locally.  His three areas of initial support are affordable housing, renewable energy and small business lending.

PBEB cannot be a retail bank.   As a wholesale firm they will rely on other community financial institutions and firms to initiate projects for joint financing.

I believe there are two factors that suggest public banks could succeed.

The first is that the increasing consolidation of financial institutions.  This means that locally owned and directed firms are becoming less and less prominent in major American cities.

When I worked at the First National Bank of Chicago ( 1974-1977), the city had three major local banks:  First, Continental and Harris Bank plus dozens of correspondent banks under Illinois unit banking charter limits.  Today I know of no major locally owned bank that calls Chicago its headquarters.

Yet municipal and country governments manage hundreds of millions of dollars that are all deposited in for-profit institutions, whose priorities may not align with how local governments might see funds used.

Just as credit unions were formed by tapping into the steady flow of wages for military and public employees in earlier generations, public governments and authorities are now focused on the wholesale use of funds with local partners.

Secondly. government today is big business.  Public contracts for roads, health care, schools involve overseeing hundreds of millions of dollars in dedicated public spending.   Some of these same skills will be required in overseeing new institutions for local financing. In many cases the expertise is already there or readily available such as Scott Waite’s hire.

In one instance, credit unions have already chosen a public banking option. The Midwest Corporate Credit Union serving North Dakota voluntarily dissolved in 2011 after the multiple uncertainties driving the new corporate regulations. They did so because “North Dakota credit unions had access to the Bank of North Dakota that provided many of the services of a corporate credit union without having to maintain a capital share.”

Just as the FHLB system has become the preferred liquidity lender for the credit union system not the CLF, public banks may accelerate their role in local financing projects that are now too large for one institution to undertake.

Scott Waite believes credit unions should embrace these efforts as it will facilitate a greater local role for their members’ funds.  And just as important, the underserved needs are growing in cities across the country, so that innovative initiatives will be critical.

We’ll know the concept has taken hold when there is a public banking support organization such as Inclusiv for CDFI’s.



Two Washington DC Observations

Truisms as events unfold in our nation’s capital.

The problem with political jokes is they get elected.  (Henry Gates)

Why government spending is endemic, at all levels:

Politicians are people who, when they see light at the end of the tunnel, go out and buy more tunnel. (John Quinton)


The Challenge of Being a New Coop CEO

Leadership changes are necessary to sustain every organization’s success.   Sometimes changes at the top work well; other times they come with drama and uncertainty.

New CEO’s, especially if brought in from outside an organization, will have a healthy disrespect for the status quo.

But no one wants a job they disrespect.

So the critical performance standard is the leader’s vision of the future.   Is the person equipped with the right motivation, not just relevant professional skill sets?  Or, are they chosen just to break from the past?

A  Difference, If Understood

Credit unions as cooperatives can teach and illuminate human possibility.  But it can only do so to the extent that leaders are determined to use the design for those ends.

Otherwise, it becomes nothing more than an aggregation of financial accounts in a marketplace full of options.

A 13th Anniversary Last Friday , October 13th

Memory can be the key to understanding events. It provides vital perspective for the present and context for future plans.

Last Friday  October  13th was an important event in NCUA and credit union history from 13 years ago.

It was the anniversary of the payoff of the most recent loan made by the CLF.   It may in fact become the last loan the Facility ever extends.  Reviewing this event illustrates why this public-private cooperative partnership has failed to play any meaningful role since in the credit union system.

Here are excerpts from NCUA’s Media Advisory of October 13, 2010  with the headline:

NCUA Repays $10 Billion in Corporate Loans

Using proceeds from selling performing assets of two formerly conserved corporate credit unions, the NCUA yesterday repaid $10 billion plus interest to the Department of the Treasury.

NCUA raised the $10 billion by selling select assets from US Central and WesCorp . . .(including) securities backed by performing residential and commercial mortgages, credit card receivables, student loans and auto loans.

The proceeds allowed NCUA to repay a $10 billion loan from the Treasury to NCUA’s Central Liquidity Facility  which in 2009 transferred the $10 billion to the NCUSIF in order to lend $5 billion to each corporate. . . while they were in conservatorship.

Paying off the $10 billion in loans clears the balance sheets of both the CLF and the Share Insurance Fund,” said NCUA Charmain Debbie Matz.

The Significance of This Event

Since that October 13the payoff, the CLF has made no loans. Or even offered a lending initiative.

When putting US Central and four other corporates into liquidation in September, NCUA eliminated the joint plan that gave all credit unions access to the Facility.

The Agency had no backup proposal.   A brief history of this period and the Agency’s effort to mandate liquidity via regulation versus a shared cooperative option is described here.

The Current Liquidity Borrowings by Credit Unions

In the first six months of 2023 credit unions increased total borrowings by $75.6 billion to a total of $120.4 billion at June 30.   The two major sources for these funds were the FHLB system which increased loans by $46 billion and the Federal Reserve, a $29 billion lending expansion.

Even natural person credit unions increased deposits in other credit unions by $650 million via brokered non-member deposit programs.

The CLF with almost $900 million in capital and $20 billion in borrowing authority is missing in action.

This absence is not because no need exists or a shortage of resources.   Rather it is an inability to work cooperatively with credit unions.  The Federal Reserve announced  its new Bank Term Funding Program on March 12 or in days following the Silicon Valley bank failure.

NCUA does not lack statuary authority as suggested by board members to serve credit unions.    It lacks collaborative leadership.

The Lesson from the Last CLF Loan

But credit unions took an important  lesson from this CLF loan payoff. The  borrowing was designed by NCUA to provide for NCUSIF’s liquidity not the corporate credit union’s well being.   Immediately after the two corporates were in liquidation, NCUA  sold the best performing assets versus  using their earnings to  minimize losses to the fund.

The borrowings were to support NCUA’s regulatory priority, not to assist with a corporate’s liquidity management.

When put into  liquidation, three of the corporates reported positive capital including US Central, Southwest and United.  The CLF was paid off.   The Agency funded the subsequent liquidations of all  five corporates by going to Wall Street to issue  NCUA guaranteed notes to fund the ongoing asset recoveries.    These new borrowings were at rates many  times higher than the cost of short term deposits and the rate on CLF borrowings.

Credit unions saw that the CLF was not a resource for their use.  It  was only a  means for NCUA to manage the NCUSIF’s cash flows for its obligations to the insured corporates’ members.  CLF’s borrowings were not  for sustaining the corporates operations. In Matz’s characterization the loan payoffs: “clears the balance sheets of both the CLF and NCUSIF,” but at the expense of the corporate members.

Mandating Membership

In  a recent interview  before the NAFCU caucus Chair Harper reinforced this view that the  CLF is only an NCUA tool, not a shared responsibility. He said staff had been requested to review lowering the current $250 million asset threshold for credit unions required to have a federally backed liquidity source (the Federal Reserve or the CLF).  That is to force more credit unions by rule to join the CLF.

When given a choice, credit unions have overwhelming decided to belong to the Federal Reserve rather than the CLF, which has only 390 regular credit union members.  The CLF is seen as simply an arm of the regulator, not a resource for credit unions.

As outlined in an earlier analysis, credit unions no longer view the CLF as a reliable  partner in times of balance sheet stress

This 13th anniversary of the last loan payment is another milestone.  It marks a year of no progress in making the CLF relevant for the credit union system.   Rather, it has just become another funding source for growing a bureaucracy with no obvious role.

Editor’s note:  Here is how one corporate recommended the CLF be changed in a 2011 comment on NCUA’s proposed liquidity regulation:

Alloya was among approximately 62 organizations commenting on the proposed regulation. The corporate’s comments centered around continuing the CLF, but making it closer in capital structure and operational nature to the Discount Window (immediate availability, little or no capital requirement), maintaining corporates as the agents for the CLF, allowing corporates to borrow from the CLF, CLF Board representation by credit unions and better investment returns on CLF stock through longer term investing.

The majority of credit union and corporate comments were similar and found value in continuing the CLF, but suggested that the structure (either capital or operational or both) be changed to preserve value. Another large portion of the comments were in reference to allowing the FHLB to act as a source of emergency liquidity.

None of these suggestions were adopted in the final rule or in CLF operations.