Month: July 2025

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Hanscom FCU’s $50 Million Bet: Is This Financially Sound and in Members’ Best Interest?

Summary: Hanscom FCU’s proposed bank purchase raises questions of financial and business soundness, transparency and whether it  benefits  the credit union’s member-owners.  While writing this follow-up, I became aware of a unique group of member-owners who for  over 18 months had been documenting and asking hard questions of the credit union’s board and management about the credit union’s performance. This included the bank purchase.  The group’s name is Hanscom Loyal.  I reviewed their communications. Their ongoing efforts, which are much broader than the bank transaction, is what makes this situation a valuable example for all credit unions.

On February 7, 2025, I wrote a post, Time to Ask WHY? about the announced purchase of The Peoples Bank ($306 million), in Chestertown, MD, by Hanscom Federal Credit Union ($1.8 Billion), headquartered on Hanscom AFB in Massachusetts, with its operations center in Littleton, MA.

This sale was singled out in a Washington Post opinion article by the former FDIC Chair Sheila Bair as an example of credit unions’ tax-free status thriving at public expense. 

The more important question: Is this a wise, sound transaction in the member-owners of Hanscom FCU’s best interest?

Why a $50 Million Price?

The Peoples Bank announced the $50 million price in their 2024 Annual Report. Hanscom FCU has released no information other than a single press release from December 20, 2024 about the purchase.

Because Hanscom FCU will be paying the 619 owners of Peoples $50 million in cash in return for the firm’s assets and liabilities, the first question should be,  “Is this price justified?”

Because Peoples is a public company with their stock traded daily (PEBC), we have much published data on their performance.  There are several ways to analyze this purchase amount.

On a price-to-12-month earnings ratio, the sale price amount is 15 times the bank’s $3.3 million net income in 2024. That is, if current earnings continue, the time to earn back the $50 million cash outlay could be as high as 15 years.

A second ratio is price-to-book value. The $50 million is 1.4 times, or a premium of $15 million, on the net equity reported in the audited statements on December 31, 2024.

Because the bank’s stock price is traded, we can compare the market’s valuation (market cap) before and after the December 20, 2024, purchase announcement. Prior to the release, the stock had traded in the $31 to $33 price range for a total market capital value of approximately $24 million (729K shares outstanding). That is, it traded below book value. Upon news of the proposed sale, the stock price jumped to $60 per share and closed last week at $58 for market value of $42.2 million. That market cap is still less than the $50 million being offered by Hanscom FCU.

These ratios will be subject to valuation and other adjustments. For example, since Hanscom FCU pays no federal or state income tax, should that amount ($960,153 in 2024) be added to projected earnings? Or, are the balance sheet assets of good will and deferred income taxes of any value to a tax-exempt credit union?

The bottom line is that the 619 bank shareholders are getting a good deal. We can see why they would want this sale to go through. The question is whether this transaction is in the best interest of the member-owners of Hanscom FCU. Their $50 million cash outlay to the bank’s owners is 22 times the credit union’s 2024 net income.

What Is the Business Case?

There has been no information from Hanscom FCU other than the press release referenced earlier to support this $50 million investment. In that release, CEO Peter Rice promises more investments in Peoples: “Through this combination, we expect to expand Peoples Bank’s ability to invest in its communities across Kent, Queen Anne’s and Talbot Counties.”

Other than cash, what expertise does Hanscom FCU bring to this 110-year-old community bank serving three mostly rural counties in Maryland? How do Peoples’ business priorities align with Hanscom FCU’s strategy? Its 15 locations are mainly concentrated around metro Boston, with one small branch in a restricted access building at MITRE in McLean, VA. The three rural Maryland counties Peoples serves are 400 miles away from Boston in a very different demographic and economic setting.

Peoples has two business lines. As a community bank, only 0.5% of its loans are to consumers ($872K), 50% to residential real estate and 38% to commercial real estate, development and general commercial loans. The commercial loans include agriculture for land, cattle, ag equipment and waterman loans for people who make a living from the ocean and farming. This traditional, long-time commercially focused bank contributed 64% of 2024 net income and managed $301 million in assets.

Their insurance segment is managed by a subsidiary, Fleetwood Insurance Group, and offers a full range of insurance coverage to businesses and consumers. The business has two offices, contributed 36% of the holding company’s 2024 net income, and managed just $7.8 million of assets before intersegment eliminations.

According to Hanscom FCU’s chairperson Teresa Conrad’s quote in the May 29, 2025, press release, this business was an important part of the acquisition: “The Hanscom team is also finalizing the Peoples Bank integration, ensuring a seamless transition and united experience for every member. With the Peoples Bank acquisition, we will fill a critical gap in our financial offerings with the addition of a new insurance company that offers a robust set of new products and services.”

There are two major issues to this goal of “filling a critical financial gap in offerings.” The first, how does a two-office insurance agency in rural Maryland serving small towns and businesses with long-time, local relationships compete in greater Boston’s saturated insurance market? Why not just buy an already established agency in that market?

Secondly, that “seamless transition” is not in the business plan announced in the December press release: “Following the close of the transaction, Peoples Bank branches will be regionally managed and continue to operate under the same name and brand. The Peoples Bancorp. Inc.’s common stock will no longer be listed on any public market.”

Instead of “seamless,” the intent is to continue with the Peoples name and brand and business model. Not only is this a dubious legal way for DBA positioning, but it also begs the question of any operating savings from inter-company efficiencies. It suggests that post transaction, the financial operations will become a standalone effort drawing more cash from Hanscom FCU as a “parent” company.

The business case is completely undocumented.  It is  a collection of generalities that suggest little effort for how the future of the two organizations will be managed. That should concern Hanscom FCU’s member-owners.

The People Bank’s 619 owners have their $50 million in cash while the credit union’s 100,000+ member-owners are left to ask: Can their leadership actually manage an acceptable a return on this investment of their funds?

This purchase appears to be a very risky, big time financial wager with the members’ money.  Whatever the price tag, if as presened below, Hanscom is unable to achieve a stable, minimum return on the assets it now has, then the whole insitution-and its member owners-suffers by just buying more at a premium price.

Hanscom FCU’s Financial Trends

I  reviewed the track record of Hanscom FCU under CEO Peter Rice, who replaced the long-serving David Sprague in 2022.  Sprague’s service was profiled in this press release:

Sprague has been Hanscom FCU’s top executive since 1996, a well-loved and respected senior leader managing over 250 employees. The credit union’s assets have grown to $1.7 billion, and membership has more than quadrupled to over 90,000 members during his 25-year tenure. He has steered Hanscom FCU to become the fifth largest credit union in Massachusetts.

Since year-end 2021, the final year of Sprague’s tenure, the following are the major firm trends under Rice for 2022 through Q1 2025 or three and a quarter years performance:

  • Shares have declined from $1.610 billion to $1.560 billion (Q1 2025)
  • Loans have increased slightly from $1.405 billion to $1.497 billion (Q1 2025)
  • Employees (FTE) have fallen a bit from 243 to 230
  • Number of branches has fallen from 22 to 15
  • Membership has grown from 91,577 to 102,714
  • Net worth ratio has increased 9.59% to 11.66%
  • ROA in 2021 was 0.80% and for full year 2024, 0.13%

The December 2024 bank purchase announcement coincided with the poorest financial performance in Hanscom FCU’s recent history. Annual growth in shares and loans was negative. The net income of $2.3 million (0.13% ROA) was down 90% from the $23.2 million in 2023.  Hanscom FCU is five times the asset size of Peoples but earned $1.0 million less than the bank in 2024.

These negative balance sheet growth trends continued in Q1 2025. That quarter’s earnings of $952,000 (0.21% ROA) were down 66% from the prior year’s first quarter.  Peoples Bank again had higher net income, even after reserving for taxes.

The most concerning first quarter outcome was HFCU’s $10.8 million in net charge offs, up 642% from the $1.5 million in 2024’s quarter.

In sum, the new CEO’s leadership in the last three years has been marked by inconsistent performance and by a sharp decline in critical financial indicators over the last 15 months.

This erratic performance raises two questions. Why is this decline occurring? With this uncertain track record, what justifies sending $50 million to the Peoples Bank owners, to purchase a firm that would seem to have no geographic, strategic, or business similarities to Hanscom FCU’s core market?

Why the Instability in Hanscom’s Financial Performance?

Here are the last 12 months of Hanscom FCU’s financial trends compared to all credit unions in the $1 to $5 billion peer group range. This comparison shows that the industry continues to grow positively on key balance sheet and income statement indicators, but not Hanscom FCU. Why?

The inconsistent trends plus the current declines in operational outcomes raise the questions about the credit union’s leadership, the CEO, and senior management, along with the Board and Supervisory Committee’s oversight of processes and procedures.

For example, one looks in vain for any transparency or explanation to Hanscom FCU’s members or the public about this $50 million transaction. The Peoples Bank owners get a full confidential term sheet to approve the sale; the buyers paying the bill are given nothing.

I have not been able to locate a 2024 Annual Report or detailed information about the annual meeting for Hanscom FCU members, apart from a brief website announcement. There also does not appear to be any readily available confirmation of the election of directors or minutes from previous meetings. The May 29 chairperson’s statement includes no context to understand how or to whom the message was intended. It is full of marketing and PR spin about community activity, but no mention of Hanscom’s steep financial decline.

Those Closest to the Action Speak Up

In response to my February post on the Peoples Bank purchase, I received an email from a group called Hanscom Loyal. They describe themselves as a cohort of approximately 40 current and former credit union employees, many also member-owners, deeply concerned about Hanscom FCU’s leadership.

They did not go public with their concerns. Instead, they sent detailed communications, including letters and emails, to Hanscom FCU’s individual board members, Supervisory Committee members, and copies to NCUA examiners. The FDIC was copied after the bank purchase was announced.

These multiple communications contain specific examples of violations of bylaws, board, and credit union policy, as well as questionable personnel and account transaction events. As these employees saw  and experienced actions of senior management and the Board’s role, if any, the group alerted those with authority over the institution to their concerns. They did not act like whistleblowers creating public alarm. They simply asked those in positions of responsibility to investigate the factual events they listed.

Over 18 months they documented an absence of internal controls, lack of following in-place processes, and regulatory compliance failures. Their examples included specific instances of improper transactions with member accounts. They included examples of incorrect information in web and other communications. One example they provided was a credit card promotion mailer stating that Hanscom FCU was FDIC insured.

Leadership and Staff Turnover

Their primary concern focused on the continued turnover and forced departures of experienced credit union personnel. The majority of Sprague’s senior team with experience has left the credit union. In instances, the resignation demand was presented as a choice: voluntarily resign to retain benefits or immediate dismissal with none.

On March 25, 2025, one employee filed suit for her dismissal. Another has submitted a formal complaint to the Massachusetts Attorney General’s Office concerning unfair wage withholding.

Such turnover in the past three years, estimated as high as 50%, is not normal. Even Hanscom FCU’s chairperson in her 2024 summary  remarks acknowledges 44 internal promotions within a constant staff size of 230. This continuing exodus not only undermines morale, but it also can result in new hires or promotions without relevant experience and knowledge for the new positions.

Such internal turmoil undermines institutional performance. When informed of such institutional problems by outsiders, often the response by those in authority is to dismiss a group like Hanscom Loyal as disgruntled former employees or “troublemakers.”

Certainly, all members would or should be disappointed with these performance shortcomings.  This group invested great effort to document wide-ranging examples of leadership and institutional shortcomings, with facts, not opinions. Their stated goal is to return Hanscom FCU to its prior level of member focus and service.

Both FDIC and NCUA have acknowledged receiving Hanscom Loyal’s specific detailed complaints of the past 18 months. One of NCUA’s responses on August 21, 2024, included the following:

I just want to confirm receipt and assure you we take these concerns seriously.  As you are aware, we are responsible for enforcing certain rules and regulations.  Employment matters, in general, are not under our purview and are governed by state law.  As frustrating as those issues might be, they are not matters we regulate or enforce.  Those are more matters for the credit union’s Board and your legal counsel, should you choose that route.  

The Regulator’s Oversight

NCUA’s characterizing these detailed concerns as merely employment matters completely misrepresents the internal management issues that Hanscom Loyal described in detail. Suggesting these events are only for the Board and Hanscom Loyal’s legal counsel to address dismisses the ‘M’ for management, in the NCUA’s CAMELS rating.  This exam component specifically assesses senior management’s performance, firm governance, and procedural oversight, including member annual meetings.

Hanscom FCU’s declining financial performance, lack of routine transparency with members, and the Board and Supervisory Committee’s failure to address documented concerns suggest a dysfunctional management team and a board and supervisory committee unable or unwilling to fulfill their responsibilities. To propose that member-owners may need to hire legal counsel is a parallel failure by NCUA to acknowledge their supervisory obligations.

Should Hanscom FCU’s $50 million proposal to purchase a bank be approved by NCUA? This effort to acquire a bank 400 miles away — without a clear business plan demonstrating any benefit for its member-owners — appears to be another example of poor management judgment.  Moreover, paying out $50 million in cash adds significant financial, operational, and market risk to the credit union, already in a financial stall.

This transaction does not appear to be a carefully considered strategic initiative; instead, it appears to be a reaction to an opportunistic proposal from brokers eager to strike a deal with a cash-rich credit union.

If the 729,000 shares held by Peoples’ 619 shareholders receive the same pro rata of the $50 million purchase, the per-share price would be $69 dollars. That is more than double the bank’s market value before the offer. So how does this transaction serve Hanscom FCU’s member-owners whose funds would pay out the bank’s owners?

What’s Next? Who Will Own Responsibility for the Credit Union?

The Hanscom Loyal group has provided Hanscom FCU’s Board of Directors, Supervisory Committee, and federal regulators with details of documented mismanagement that directly affect the credit union’s financial performance. This is most evident in high employee turnover and specific examples of questionable practices that have been shared.

Hanscom Loyal has acted as member-owners should.  They collected facts and brought these documented issues to the appropriate parties. Despite NCUA’s onsite annual supervisory exam and the Board’s awareness of the group’s forwarded operational issues for over a year, Hanscom FCU’s leadership nevertheless proceeded with the Peoples Bank purchase announcement in December 2024, approving it unanimously.

It should be clear to even a casual observer that Hanscom FCU’s member-owners would be best served if the credit union first put its own house in order. Spending $50 million now sends a message to concerned members that the cooperative system is not working for them. Annual meetings appear, at best, closed in-house affairs with no transparency for the owners to become involved.

NCUA’s cursory advice to members to hire legal counsel if they receive no response from the credit union is an abdication of their responsibility to ensure the safe and sound operation of the credit unions they examine.

The NCUA’s August 21, 2024, email acknowledgement to Hanscom Loyal’s list of concerns included this:

We will certainly consider any matters violating areas we are charged with overseeing, as well as evidence of fraud.  All examination results are confidential and cannot be shared.  

I encourage you to submit the matters below to the Supervisory Committee and the Board of Directors of the credit union, if you haven’t already.  The Supervisory Committee is the “watchdog” of the credit union and is responsible for independently investigating such complaints.

What are credit union member-owners to do when there is no Supervisory Committee watchdog responding to their concerns, no Board elections that are open to all members, and no meaningful evidence that NCUA exams address  either specific operational issues or an institution’s leadership shortcomings?

Instead the opposite message  is sent to member-owners when the credit announces it is investing $50 million to buy banking assets in a rural market 400 miles distant.

If anyone with  internal responsibility for the credit union or NCUA in its external examination findings had given any credibility to the group’s many messages, this bank purchase offer should not have seen the light of day.

Credit union leaders’ failures to respond  and impotent regulatory oversight is, unfortunately, not uncommon in the credit union system.  In previous blogs I have provided examples such as yesterday’s Space City merger with TDECU.  Individual members spoke up, wrote their credit union and regulators with deep concerns, but were treated as “nobodies.”

The difference in this case is Hanscom Loyal’s organized effort, the volume of factual examples and a commitment going on two years to make things right.  They are doing this in the right way not in public outbursts.

As uncomfortable as this example may be for some, every credit union would benefit from member-owners who believe in their credit union so deeply that they are giving time, effort and energy to make their coop better.

Hanscom FCU’s  entire operating context suggests that this proposed bank purchase should be dropped immediately.  The leadership issues would benefit from having persons with the expertise and commitment of Hanscom Loyal added to internal oversight roles.

Everyone’s overarching goal should be to restore the credit union as a true cooperative whose priorities serve member-owners best interests, first and always.

Note: In writing this follow-up, I have reached out to both Hanscom FCU and The Peoples Bank but have not had a response. Should I receive responses, I will update this post. The Hanscom Loyal group’s email is: hanscomloyal@proton.me

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The Rest of the Story:  How State and Federal Regulators Failed to Protect Space City Members in the TDECU Merger

This past weekend a Houston Business Journal article noted a 30-day gap in TDECU’s disclosure of its failure to receive regulatory approval for its  Sabine Bank purchase versus the date of the Bank’s online post.  During this period TDECU finalized the merger of Space City CU.  During the public controversy, regulators feigned impotence to do anything about this deeply flawed transaction.

To understand the significance of this regulatory inaction,  it is helpful to recall some circumstances of this merger travesty.

On May 25th, I posted a two part analysis of the proposed merger of the $147 million Space City Credit Union with the $4.8 billion TEDCU.

The Member Notice was mailed on March 28th, providing the public for the first time the details of payments to senior staff. All member voting ended May 14th.   The result was 862 of the 12,000 eligible members voted with 82% for and 18% against.   End of story?

A Cooperative Merger Tragedy

I summarized this sleazy event as follows:  This self-dealing transaction marked by conflicts of interest, lax board oversight and member manipulation is the latest example of internal corruption in the $2.3 trillion cooperative system. . . State and federal regulators seem oblivious or powerless to stop this internal pillaging.

Here were some of the merger specifics. In distributing the surplus from Space City’s 14.6% net worth, the top three employees received $6.750 million of which $4.0 million went to the CEO. He already had a cu paid retirement plan and a $3.250 split dollar life insurance plan.  This $4.0 million total was equal to 53% of the entire retained earnings of the credit union in its 60-year history!

Two components of the total payments to the CEO and COO came directly from TDECU, not Space City’s reserves.  This total of $850,000, approved byTDECU’s CEO and board, was an  outright “gratuity.”  What was the fiduciary responsibility of these two  persons with direct responsibility for arranging the merger and its approval by members when receiving direct payments by both parties?

To top off these senior staff incentives, members were given a “bonus” dividend from their collective savings.  However, it was designed so that members with the least amounts of shares  received the greatest percent return.  Those who had the most to lose received the lowest percentage.  Specifically all members with $289 in savings or less, would receive $100 bonus.  If the vote were NO, you get nothing.

In addition to this blatant self-dealing, the basic concern with this merger was that the financial performance of TDECU, the continuing credit union.  For the prior  15 months its financial performance had deteriorated.  It reported a loss in the first quarter of 2025, and a troubled loan portfolio with 2.01% delinquency (up from 1.13% prior year) and an allowance coverage ratio one third of the peer average.  Its balance sheet loan and share  growth had flatlined under the new CEO.

Most importantly to TDECU’s future ambitions, it had announced in April 2024  the purchase of the Many, LA based $1.2 billion Sabine Bank.  A  “definitive acquisition agreement” was in place with the transaction to be completed in early 2025.

“TDECU is on a growth journey to expand across the state of Texas and beyond,” the credit union’s CEO, Isaac Johnson stated.

The Outcome and Regulatory Silence

When askng the state and federal credit union regulators, when and who had approved the merger, these were the replies:

From the Texas Commission:  preliminary approval was given by Department (Commissioner) on February 6, 2025. . .

From the NCUA:  The merger was approved by Southern Regional Director Keith Morton on March 6. . .

So long before the Space City members knew any details of the merger (Member Notice dated March 28), both credit union CEO’s knew their two regulators had approved their self-serving actions. The financial statements with the Notice were also six months old, September 2024, not even for the full 2024 yearend.

The members knew nothing until receiving the March 28 Notice, but the credit union leaders who privately put it together,  knew they had the deal approved.

All the controversy after the members and public learned of these details went for naught.  The regulators had said OK. It was all over but the shouting, which occurred in June when the merger was completed.

So at this point the merger  just seemed another example of regulatory ineptitude, indifference or perhaps other factors such as legal or poltical intimidation preventing any relook. The members were unprotected, fleeced and alone.  Those charged with protecting members’ best interests feigned impotence, or would assert, It’s just up to the members.

The Regulators’ Double Speak

But on July 3rd an article appeared in the Houston Business Journal:  TDECU delays rebrand as it closes Space City Credit Union merger, terminates bank acquisition 

The article’s main points are that the Sabine Bank acquisition is off, the Space City merger is done, and that the rebrand using Space City is on hold.

The most interesting line however is the reporter’s final comment when reacting  to this post on the Sabine Bank website about the failed purchase which reads in part: 

“On June 4, TDECU and Sabine State Bank and Trust Company (Sabine) announced their mutual decision to not move forward with the planned acquisition and to terminate their agreement . . . to which the reporter added:

The termination was also not disclosed directly by TDECU via a press release or to the HBJ until July 2.

This is the example of regulatory double speak. This “definitive acquisition agreement” of Sabine needed only regulatory approval.  This means NCUA and the Texas Commission would make the decision because  this is where the oversight of the outcome would reside.

The deal got stopped, but was not disclosed by TDECU until July 2,  Sabine’s post is dated June 4.  Why?

The obvious answer is so the Space City merger can proceed unimpeded.  The  credit union regulators refused approval of the bank acquisition because they didn’t believe TDECU was up to the task.  But go ahead and take over these 12,000 members and their future for this is an event too minor to concern us.

The TDECU regulatory hold up did not begin on June 4.  The potential problems with this purchase and TDECU’s declining performance were obvious for at least six months from call reports. But proceed with the credit union takeover.

This regulatory double speak, two TDECU transaction and two opposite outcomes, is the most concerning aspect of regulatory oversight. The Texas Commission and NCUA did not respond to the deeply concerned members who spoke out only after they first learned how disgusting  this deal would be.   They were “nobodies.”

Besides the regulators already told the credit unions it was OK.  They couldn’t  go back now and change their decisions made in private because of members’ concerns.

By all the standards most members care about, the Space City merger heist was abundantly clear.  The regulators ignored their own words such as the members’ best interest and fiduciary responsibility. The members are sheep left to the care of wolves.  In this case both state and federal regulators aided and abetted their exploitation.

The Sabine Bank purchase was stopped by credit union regulators while they stood still during the acquisition of Space City at the very same time. TDECU’s capabilities were fine for credit union members but not a bank’s customers.  TDECU is now backing away from even converting to the Space City brand—a selling point in the merger.

Today we live in a political debate  where regulatory oversight is presented as one of two extremes:  laissez-faire, that is let the market decide or, regulation protecting those powerless against market exploitation.

But there is a third possibility,  worse than these two political extremes.  This is fake regulation deceiving  the public that regulators really are on the job and have rules and processes in place to ensure compliance.  But the regulators do not enforce their own rules.

The credit union market sees this regulatory GAP clearly and the zealous and ambitions are rushing to take advantage.  The result will be that the credit union members may lose their cooperative system because of regulatory neglect.

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July 4th, 2025: The Act of Freedom

Freedom is not a state; it is an act. It is not some enchanted garden perched high on a distant plateau where we can finally sit down and rest. Freedom is the continuous action we all must take, and each generation must do its part to create an even more fair, more just society. 

—John Lewis, Across That Bridge

Honoring Those Who Took Action

Citizens marching in Bunker Hill, Massachusetts on Independence Day 2025

Remembering the  Minute Men’s Call to Action

The 4th of July, 2025 Kyiv Ukraine

People take shelter overnight in an underground metro station during Russian missile strikes. 

An American Who Answered Freedom’s call in Ukraine

A portrait of fallen U.S. volunteer fighters and flags among Ukrainian ones at a makeshift memorial to Ukrainian servicemen and international volunteers killed in action on Independence Square in central Kyiv on July 2, 2025.

From the Kyiv Independent July 3, 2025: As Russia ramps up missile attacks, US halts promised air defense shipments to Ukraine.  Kremlin welcomes reported pause in US arms shipments to Ukraine, says it brings war’s end closer.  

Celebrating Liberty in Ukraine

The largest prisoner exchange shows the joy of freedom regained.

(https://www.youtube.com/watch?v=64J55YzwI5s)

An Anthem Sung Around the World Honoring Today’s Independence Fighters

On this 4th of July, all freedom loving people will stand at the national anthem for one country.  Its people are on the front lines defending the right of all persons to determine their political destiny.

Listen as this anthem is sung from the New York Island to the Baltic Sea by the largest choir in the world.

(https://www.youtube.com/watch?v=mUfwy3f3R4s)

(https://www.youtube.com/watch?v=4INYnx5e5JI)

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Ukraine: What Elon Musk Should Learn from Yevgeny Prigozhin

Before our July 4th patriotic celebrations, I want to pesent a cautionary note about the insecurities of those who wield great power.

Russia’s invasion of Ukraine has many lessons for America. I want to suggest a moment of political parallel  in Russia’s conduct with an evolving situation  in America.  In both cases a senior, powerful  wealthy political insider decides to oppose the leader who gave him national standing.

Elon Musk is an intelligent, driven, iconoclastic person capable of great business innovations and disruptive technology accomplishments.

In 2024  he decided to go all in on the presidential  race. He became the leading donar to Trump’s campaign, at an estimated amount of nearly $300 million.  For this contribution and other practical benefits, Trump appointed Musk as the anointed but unconfirmed leader for DOGE’s radical government downsizing.

Musk’s team wielded a wrecking ball across all government. He gave political cover for  the persons confirmed by the Senate who were theoretically in charge of  individual agencies.  They could now fire people and shut down programs at will.  For example, the Agency for International Development’s (AID) closure and transfer of any minor leftover functions to the Rubio-led State Department

The Parting of Ways

Elon’s service certainly benefitted his several companies with government and foreign contracts. These include  expanded agreements with Space X, Tesla and the Starlink satellite communication system, especially from new country signups during trade talks with the US.

But ultimately these two men’s egos could not fit in the same room.  Elon departed in June to focus on his companies.  But he couldn’t help but take some parting and subsequent shots at Trump’s policies. He was especially outspoken on deficit spending in the reconciliation  bill which also ended much of the government’s support addressing climate change.

Musk then threaten to oppose members of Congress who supported Trump’s positions on critical legislation. At one point he  mentioned the possibility of funding a new “center” party to support his preferred policies.

Musk used X and Trump Truth Social and his presidential pulpit to clash publicly. The exchanges grew so heated  that Trump recently said his administration should “DOGE” Musk’s government contracts.  And perhaps research his citizenship application to see if he can be “denationalized” of his US citizenship and then  eligible for deportation.

The Parallel from Russian Politics

From Wikipedia: Yevgeny Viktorovich Prigozhin[a]  (1 June 1961 – 23 August 2023) was a Russian mercenary leader and oligarch. He led the Wagner Group, a private military company, and was a close confidant of Russian president Vladimir Putin until launching a rebellion in June 2023.

The Wagner group had been a major ground force fighting to help Russia conquer Ukraine.  However he gew increasingly frustrated with the Russian military leadership, openly criticized the Russian Defense Ministry for corruption and mishandling the war. He said the reasons Putin gave for invading were lies.[19] 

On 23 June 2023, he launched a rebellion against the Russian military leadership. Wagner forces captured Rostov-on-Don and advanced hunderd of miles toward Moscow.[20] The rebellion was called off the following day, and the criminal charges against Prigozhin were dropped after he agreed to relocate his forces to Belarus.[21] 

On 23 August 2023, exactly two months after the rebellion,[22] Prigozhin was killed along with nine other people when a business jet crashei jusr north of Moscow.[23] The Wall Street Journal cited sources within the US government as saying that the crash was likely caused by a bomb on board  (Source: Wikipedia in Italics)

Comparable Political Events?

Musk and Prigozhin  soared to the top of their country’s political authority with money and demonstrated success managing the critical levers of power in each society.

Prigozhin  eventually turned on Putin but appeared to have reached a truce by undertaking some of Putin’s business and military “chores” in the Middle East and Africa.  But Putin wasn’t taking any chances with this mercurial outspoken leader even when he re-pledged fealty.  He was killed despite the public appearances of a political settlement.

Trump has threatened all of Musk’s business empires if he continues to speak out. Especially should Musk support political candidates who would oppose Trump’s endorsed supporters.

When a leader’s temperament, actions and words all speak to his goal of total authority, there is no place for opposition.  Particularly when the critical words and deeds are public. And from persons who have proven political influence. If someone gets in the way of the leader’s total power, then they must go to exile, either politically or geographically,  Or be totally neutered by some means.

It took Putin just two months to end any facade of a truce with Prigozhin. Trump’s timeline and methods may be different.   But for every authoritarian leader one fact is true: uneasy lies the head that wears a crown.

 

 

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Would Members Say This About Your AI Chat Service?

It is increasingly hard to call an organization which serves retail customers without first navigating a series of AI driven questions about your needs.

Sometimes these automated phone trees work well; but many times people call because of a specific  need that does not easily fall in one of the menu of options.

Many credit unions believe personal service is their ultimate advantage.  Several credit unions share stories they send staff to illustrate the organization’s  culture they believe to be their competitive difference.  Here is an example from June.

The CEO: A long-time member took the time to call me to rave about Monica and tell me she doesn’t even rate shop anymore. She then forwarded me an email that she sent to Monica.

The member’s email: I want to take a moment to thank you—from the bottom of my heart—for being the absolute best mortgage advisor in the world. Working with you is not just a transaction; it’s a relationship built on trust, care, and genuine connection.

You are incredibly thorough, patient, and kind. Every time I’ve needed something, you’ve been right there—quick, clear, and supportive. You always know just what to say and when to say it, and that gift has brought so much peace to what can often be a stressful process. I trust you completely when it comes to my loans. I don’t even consider going to other lenders—I come straight to you.

You’ve earned that trust with your humility, consistency, and deep care for not just the business side of things, but for me and my family as people. You remember the details, the milestones, and the little things that matter. That personal touch sets you apart in every way. As my life changes, you’ve remained a constant. You are the go-to, hands down. No one else matches your competence, your capability, or the heart you put into your work.

It’s clear you love what you do, and that love shines through in every interaction. I am incredibly thankful, honored, and truly Blessed by Jesus to work with you. Your presence has been a gift.

This credit union’s performance exceeds their peers consistently on all financial and net promoter score indicators.  While AI phone trees and “live” chat may be a solution for some activities, it will not be the means to build relationships with members.

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Board Meetings and the Responsibility of Leadership 

The public facing role of leaders is especially vital during two important circumstances–when there is a transition at the top and during a crisis or moments of great uncertainty.

NCUA’s current situation meets both tests.  There is the unprecented removal of two  of the three board members by  President Trump.  This was followed by the immediate departure of up to 250 agency personnel as a cost savings ploy.  And as noted below, there has been a sudden increase in credit union regulatory closings.

NCUA’s public responsibility includes timely and informed transparency about events under  the agency’s control.  There is uncertainty about who is on the leadership team. Who is making critical decisions? How can we trust that NCUA’s actions or inactions are being properly considered or just carried on by rote?

Four FCU Closures in 60 Days

Since April 30, NCUA has taken possession of four FCU credit unions. Two were liquidated outright, one conserved and the other merged. This is a very high number in just two months in a relatively stable operational environment.

The four with summary data from the March 30 call reports are:

Name          Date NCUA  Action       1Q ‘25 Assets          1Q Net Worth

 

Unilever       April 30 liquidated       $ 47 million         9%

Aldersgate  June 18 conserved      $ 10.6 million             10.2%

Soul Community June 20 liquidated   $308K      100%

Butler Heritage  June 30 merged   $9.6 million               4.92%

Some notes on each case.

For Unilever this immediate liquidation without a conservatorship, suggests a major financial loss similar to the Creighton FCU $13 million shortage in June 2024.  NCUA has provided no explanation for the sudden insolvencies in either case.

Aldersgate with 10% capital, was chartered in 1956 to serve the Methodist church employees. It was conserved without explanation or even notice of who is now running the operations. NOTE: this morning NCUA stated it liquidated the credit union.

Soul Community was chartered on December 9, 2024.  At March, it reported 21 members with $308K in assets, but no loans or expenses.   All capital.   How can a new charter which naviagates NCUA’s arduous charter steps including both credit union mentors and examiner oversight, end up stillborn?

Butler Heritage is the one example of financial underperformance, but still with 5% net worth.   An ironical message on the credit union’s website assures members they are in good hands with NCUA oversight:

BHFCU is charted and supervised by the National Credit Union Administration.  NCUA performs annual examinations of the credit union’s records, policies, and procedures.  This ensures the credit union’s financial soundness and verifies operations are conducted in compliance with applicable laws and regulations.

This number of regulatory closings in two months is highly unusual.  The lack of any factual information about these FCU’s circumstances is unsettling.

This failure to inform the public undermines trust in NCUA’s supervision, not to mention a credit union’s reputation with sponsors like Unilever.  These are, or should be, unusual events.  No one is explaining them.

The silence raises the question whether NCUA is using their authority to coverup supervisory or examination shortcomings with NCUSIF funding. Were there annual exams? Supervisory contacts?Especially troubling are the similarities between Creigton and Unilever’s sudden dramatic losses of published net worth.

The Importance of NCUA Board Meetings

In this time of leadership transition and growing uncertainty, public board meetings are critical to understand what the agency’s leadership is focused on.

For the past 18 months,  NCUA’s board meeting schedule has been at best erratic.  In 2024 Chairman Harper was on medical leave for several months and Ostka on maternity leave.

Even when a full board was present, the substance was limited and hard topics or discussions avoided.

In the first six months of 2025  only two public meetings have occurred.  One was with the full board in February and Hauptman’s solo meeting in May.

The NCUA has said the schedule of future board meetings is “tentative.”   In a June 6th press announcement the Agency stated:  dates of NCUA Board meetings should be considered tentative until the issuance of a formal meeting notice. All future meetings’ agendas and schedules are subject to change at any time. 

Some have gone further to assert there is no requirement to hold a monthly meeting period. Rather board meetings need occur only when the need arises.

Public NCUA board meetings are both a responsibility and a recognition that the Agency’s leadership is accountable to credit unions and the public.

Some credit unions  have asked to end their mandatory monthly board meeting.  At this point I yield my pen to Ancin Cooley.

His response to the suggestion that  board meetings should be optional applies to both credit unions and NCUA.  They are an inherent responsibility of what it means to be a board member as he explains below:

Monthly Board meetings are not the problem.

They serve one critical purpose: cadence.

That cadence builds a culture of reporting, transparency, and member-focused accountability. It keeps the board engaged—not just symbolically but structurally. It’s a space to learn, ask, challenge, and listen. It’s where the member’s voice is supposed to show up. 

And if your board meetings are dragging or bloated? There are better ways to fix that than eliminating the meeting altogether. . .

There is a free-market capitalism running its playbook inside the cooperative movement.  . . 

We are watching it unfold in full view: 

  • Opposition to mandatory succession planning.
  • “Fiduciary duties of Credit Union Directors” 12 C.F.R. § 701.4? Routinely unenforced—more decorative than functional.
  • Supervisory committees? Once a critical layer of oversight, now neutered and marginalized—weakened to the point of impotence 

Each move—on its own—can be rationalized.

But taken together? It’s a pattern. A roadmap. Its “open season” on credit unions. . .

Let me get ahead of the most common rebuttal:

“It’s just removing the requirement to meet monthly. A credit union can still choose to meet every month if it wants to.” 

Yes, technically, they could.

But that’s not the point.

This isn’t about convenience or choice. This is about institutional welfare. 

There are some safeguards you don’t leave to chance, because they protect the collective health of the system. 

That’s why we don’t suggest seatbelt use. We don’t recommend elder abuse protections. We mandate them—because of the public trust at stake. . . 

This is the cooperative movement. And with that comes a higher standard of care—because the people advocating for these changes did not build these institutions with their own money. They inherited them. And now they’re chipping away at the very frameworks that make them trustworthy. 

I would hope all NCUA staff would read his words. Public duty is a public trust.  Regular public board meetings are an essential  aspect  of an NCUA board member’s obligation to well and faithfully discharge the duties of the office.