A Theft of $10 million or Just Spreading Credit Union Goodwill: You be the Judge

This is a true story.  The lead characters are the CEO’s and boards of the two merging credit unions, NCUA’s Regional Office, CURE in DC and the California Department of Financial institutions.

The facts are from documents sent members, IRS 990 filings, FOIA data and public statements by those involved.  I give my point of view.  You can decide what your interpretation of the information would be.

The Story Begins

The first step was for the actors to draw up their scheme, include a lot of financial “chaff”  around the theft and then decorate the proposal with positive sounding future rhetoric  about “empowering people and economies of scale.”

Next, submit this draft proposal to NCUA’s Regional office for their OK.

No surprise there. NCUA approved the plan, detailed below.  Now it is full speed ahead.

With the regulator’s green light, the next step was to form a California based non-profit with initials mimicking the credit union’s name: FCCU2 Foundation.  The stated purpose is to “support charitable and educational activities for the betterment of the Stockton area.”  Despite the name, it is neither a foundation in traditional meaning nor tax exempt.

The two executives responsible for this new “charitable foundation” are the credit union’s CEO, Michael Duffy and the Board Chair Manual Lopez.   The organization was registered on June 25, 2021 with Lopez the CEO and Duffy the agent.  These two are also members of the five-person credit union board which approved these actions.

On August 6, or forty-two days after registering FCCU2, Board Chair Manual Lopez signs Financial Center Credit Union’s Notice of Special Meeting announcing the intent to merge with Valley Strong Credit Union.  Voting will end on September 23.

The Notice contains required information about the transfer of credit union reserves to this just created organization including:

  • the $10 million “capital distribution” to the newly formed non-profit FCCU2;
  • a new job for CEO Michael Duffy as Chief Advocacy Officer for the continuing credit union, Valley Strong;
  • Valley Strong Credit Union CEO Nicholas Ambrosini’s commitment to provide “an additional $2,500,000 to the FCCU2 Foundation over a term of ten years.” The wording is unclear whether this is $2.5 million in total or $2.5 million per year ($25 million) for ten years.

Other mandatory disclosures in the notice detail the additional financial benefits four of the five senior managers will gain from the merger.  A special  dividend will be paid to  members if the combination is approved in their vote.

This special dividend is feasible because the merging credit union’s net worth, over 16%, is double the 8.7% at Valley Strong.  The proposed dividend will be determined by a complicated proposal based on member tenure, most recent 12 month share balance with a maximum cap on the share balance.  The estimated payout is “approximately $14,973,948.00” in the Notice-an unusually precise number, suggesting a very detailed plan.

Members were given 48 days to cast their vote. On September 23, 2021, the called special meeting took place.  38 members attended in person.  Thirteen voted in favor and zero opposed. 2,667 members mailed ballots with 383 opposed and 2,284 in favor.

The final tally was 86% of members for and 14% opposed. Only 9% of the credit union’s 29,672 members voted on this request to give up their charter.

Financial Center’s Final Bottom Line

The merger was formally completed on October 1, 2021, seven days after the vote.

The financial results of the merger are reported in Financial Center’s last call report as of September 30, 2021. The loss for this final nine months  of the credit union’s 66-year life span is $23.7 million. This is due to the $10 million “capital distribution” to FCCU2 and recording the special dividend of approximately $15 million.

This one quarter’s loss reduced the credit union’s net worth ratio, accumulated over seven generations, to 12.4% from 17.2% one year earlier. That ratio was still 4% points (50%) higher than Valley Strong’s net worth at the same date.

Faking It Till You Make It

Recent events in California have highlighted the ethos of self-enrichment, especially in Silicon Valley startups.  A phrase used describing these unproven business ideas is: “faking it till you make it.“

This is the practice of promising future bold success even though past results do not support the vision.  When there is little or no objective evidence that a concept could succeed, a hyperbolic sales pitch is necessary to continue fund raising and keeping the effort going.

Michael Duffy has worked at Financial Center since 1993, the last 21 years as CEO.  His sister, Nora Stroh, also joined in the 1990’s.  She was Executive VP and COO, the number two position, all the time Michael was CEO.  In the 990 IRS filing for 2018, each reported total compensation of over $1.0 million.

During the final five years of their leadership, the credit union’s loans declined every year, from a peak of $176.5 million at December 2016 to $102 million at the merger date.  This is an annual growth of -10.3% (negative).  Total members fell by 2,700 or almost 2% per year in the same time frame.

However, the credit union continued to increase its net worth ratio reaching a peak of 20% at December 2018, before falling to 17% one year prior to the merger. Until January 1, 2022, regulators considered credit unions well capitalized with 7% net worth.

As net worth rose, falling loan balances resulted in the loan to asset ratio declining from 39% to 16% at the merger date. As these risk assets fell, the credit union continued adding unnecessary  reserves, reaching almost three times (300%) the well capitalized standard. This resulted in shortchanging members on their savings returns and/or charging higher loan rates than necessary for a safe operation.

The credit union’s leadership failed year after year in its most critical member service: making loans.  However, it piled up reserves relentlessly, until the leaders decided to bail out.  And take some of the surplus reserves with them.

Maintaining a Positive Public Profile

During this same period of decline, the credit unions maintained its public relations in high gear.  According to the 990 filings for 2017 and 2019, the credit union made political donations from members’ funds for local political campaigns, such as Stockton city council and mayor, and for statewide office, Newsom for California Governor.  Political donations in 2019 went to ten campaigns and $25,000 to the California Credit Union League Pac.

Maintaining the positive  image was important for Duffy. On June 1, 2020, the credit union announced a $1.0 million donation by the Michael Duffy Family Fund and the employees of the credit union.  An enlarged symbolic check to Stockton’s COVID-19 Response Fund was given by Duffy to the mayor, recorded for TV broadcast, and later published on social media.

The same press release also stated that the credit union had developed a Loan Holiday program to “alleviate financial burdens for its members.” Whatever the program’s intent, outstanding loans at the credit union fell by $40 million in 2020 from the prior year.

In the many years leading up to the merger, the credit union had been operating with the form but not the substance of a cooperative charter.  It was run as a family business, promoting the public profile of the CEO, not the well-being of members.

In contrast with the nationwide member and loan growth in the industry, Financial Center’s data shows it had ceased serving members as its primary activity. Instead, it added to a bigger and bigger reserve nest egg to dip into down the road. In other words, faking it till you can take it.

A Change of Perspective

Michael Duffy’s public  announcement of the merger intention at the end of May, 2021, was accompanied by uplifting logic and his recent strategic  insight:

“As the CEO of Financial Center Credit Union for the past 21 years, my perspective on mergers has evolved just as much as our industry has in that same time period. As credit unions built by select employee groups (SEGs) increasingly partner with community credit unions, I have marveled at what credit unions of today’s scale can accomplish when they join forces with their Member-owners and communities chiefly in mind.

In a financial services sector that is constantly evolving, this merger is a true embodiment of the credit union industry’s cooperative mind-set. At its core our partnership with Valley Strong represents us selecting the best credit union partner to help us achieve our goals faster than we could duplicate on our own.

The phrase ‘Growing Together,’ is a perfect adage, as this merger represents a strategic partnership between two financially healthy, future focused credit unions committed to providing unparalleled branch access, digital access, and amazing service for the Members and the communities they serve.

After three decades of leadership of the credit union, Duffy has concluded that the institution he led can no longer serve its members because it is not big enough ( “scale” )or “fast” enough.   His reward for this insight and merger endgame is a new position as Credit Union Advocate at Valley Strong. He gains control of  $10 million  funded by the credit union, a firm  no longer able to keep up with the times under his leadership.

It is more than self-dealing hypocrisy.  It is pilfering the members’ money.

Brain Dead Regulatory Oversight

One member who saw through this charade posted a comment on the NCUA’s member-to-member web sight, reviewed by NCUA’s CURE.  He urged a No Vote stating in part;

If Financial Center Credit Union is so flush with cash that it wants to give away $10 million, then that amount should be distributed to members. I’ve written to FCCU twice asking for the rationale for giving away $10 million. They have failed to answer me, obviously because there is no rational reason for giving away $10 million from its member-owners.

However, this brazen appropriation of members’ funds was condoned by the regulators-at every step.

NCUA’s multiple levels of review as well as California’s Department of Financial Protection and Innovation must have been braindead when reviewing this diversion to the control of Duffy and his board Chair, the two founders of FCCU2.

The magnitude of the grab and the cover story of good intentions diverted multiple regulators from their public responsibility.  Especially when accepting these future plans by leadership that had conned their members for years.

NCUA is fully aware of the self-dealing possible in mergers. It posted some of its  concerns when explaining its new merger regulation approved in June 2018.  The following are some of the reasons in the Board Action Memorandum supporting this updated rule:

“The Board acknowledges, however, that not all boards of directors are as conscientious about fulfilling their fiduciary duties (in a merger) . . .

The Board also confirms that, for merging FCUs, the NCUA’s regional offices must ensure that boards and management have fulfilled their fiduciary duties under 12 C.F.R. § 701.4.

Each Federal credit union director has the duty to:

  • Carry out his or her duties as a director in good faith, in a manner such director reasonably believes to be in the best interests of the membership of the Federal credit union as a whole, and with the care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances;
  • The duty of good faith stands for the principle that directors and officers of a corporation in making all decisions in their capacities as corporate fiduciaries, must act with a conscious regard for their responsibilities as fiduciaries.

“Several commenters questioned the NCUA’s authority to regulate credit union mergers, or suggested that the NCUA’s role is limited to safety and soundness concerns. These comments are inaccurate. . .

“In contrast to commenters’ assertions, the statutory factors the Board must consider in granting or withholding approval of a merger transaction include several factors related to safety and soundness, such as the financial condition of the credit union, the adequacy of the credit union’s reserves, the economic advisability of the transaction, and the general character and fitness of the credit union’s management. . .

“Another (commentator) suggested that members have no role in considering merger-related payments to employees. These comments are legally inaccurate and philosophically off-base. The net worth of a credit union belongs to its members. Payments to insiders, especially in the context of a voluntary merger where a credit union could choose to liquidate and distribute its net worth among its members, are distributions of the credit union’s net worth. . .

“Further, the fact that ownership of a portion of a credit union’s net worth is less negotiable than a share of stock in a public company is irrelevant at the time of a proposed merger transaction. A credit union in good condition has the option of voluntary liquidation instead of voluntary merger. . .

(Note:  At June 30, 2021 the credit union reported $109.2 million in total capital.  Cash on hand was $138.9 million.  Net worth ratio was over 16%.  If the credit union were liquidated this would have given the greater Stockton community this immediate cash benefit. The 29,000 Members could choose to join another credit union or use the funds for immediate needs.   Instead the members received just 13.7% of their collective savings in a one time dividend.  Even though this option is referred to in the rule, there is no indication this was ever considered.)

“The Board agrees that mergers should not be the first resort when an otherwise healthy credit union faces succession issues or lack of growth. . .

If these specific statements are insufficient for exercising regulatory judgment, the common law understanding of fiduciary responsibility is even more clear:

The duty of good faith is the principle that directors and officers of a company in making all decisions in their capacities as fiduciaries must act with a conscious regard for their responsibilities as fiduciaries.  These include the duty of care, duty of loyalty and the duty to act lawfully.

Self-dealing is an illegal act that happens when a fiduciary acts in their own best interest in a transaction, rather than in the best interest of their clients.

“General Character and Fitness”

This misappropriation of $10 million of member funds by the CEO and Chair of Financial Center should bring the following actions by NCUA:

  • the full amount of the $10 million diversion should be clawed back from FCCU2 and distributed to the members;
  • the instigators at the board and in management who developed and implemented this scheme should be permanently barred from participating in credit union affairs;
  • the minutes and all other documentation relating to the additional required contribution(s) of $2.5 million by Valley Strong to FCCU2 for ten years should be reviewed. If this commitment was a quid pro quo (inducement) in return for the merger, then all parties approving this payment(s) should also be barred from engaging in the affairs of a credit union-board and management.

Every person in the regulatory approval process of this merger should have their actions reviewed to determine if they should continue to be in positions of responsibility.

Every participant will have an excuse. The creator and enablers of this transaction will defend their role by saying NCUA approved it.  Then they will point out that the members voted on it. NCUA staff will assert there was no safety and soundness basis to object-despite the many Board  statements quoted above.

Citing deeply flawed processes to defend one’s conduct, does not make the actions proper.

In presenting these defenses, the parties involved merely demonstrate incomprehension of one of the oldest rules of society: Thou shalt not steal.

Were such excuses offered, it would  confirm the absence  of fiduciary awareness and protecting member interests by the parties to this transaction.

These failures are not due to a rule needing updating. Rather it is an example of persons who lack commonsense judgment about accountability.

If NCUA fails to claw back the funds and do nothing it will demonstrate that it has neither foresight nor hindsight when it comes to protecting members. However, this would not be the first time such blindness has occurred; only the latest example.

Ignoring this case will just create a new benchmark for the next merger personal enrichment effort. It’s time to halt these sham merger member deprecations.




BON MOTS II for Friday

A member comment on the Proposed Merger of WarCO FCU and First Financial:

The merger may appear to be a financially good move as First Financial of Maryland FCU has more assets. However, the documentation indicates the Pocomoke location “will remain open for a period of time.” There are no First Financial of Maryland FCU’s located on the Eastern Shore. Therefore, all work will need to be done electronically and one most likely will no longer be able to walk into an office anymore.  Brian Cook, Member, WarCO FCU

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“You have to pick the places you don’t walk away from.”  Joan Didion

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Jim Blaine: I think one of the ideas which used to ring true was the thought that trying to compare CUs to banks was like trying to compare Ralph Nader to GM because they were both in the car business….any attempt at comparison doesn’t really make sense…entirely different purposes. Credit Unions should never be “comparable” to banks; it seems a useless exercise…CUs should provide the “contrast” to banks. ( January 2022)

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 Jeff Bezos: If you’re competitor focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.

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Ed Callahan: “The only threat to credit unions is the bureaucratic tendency to treat them, for convenience sake, the same as banks and savings and loans. This is a mistake, for they are made of a different fabric. It is a fabric woven tightly by thousands of volunteers, sponsoring companies, credit union organizations and NCUA-all working together.“  (Chairman, National Credit Union Administration, April 1985)

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Samuel Johnson  observed that “what is written without effort is generally read without pleasure.”

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Weekend reading recommendation: The Fed’s Doomsday Prophet Has a Dire Warning for Where We Are Headed.   The article illuminates the distinction between traditional consumer price inflation and asset inflation (S&P index up 47% the last two years) and the consequences for our political economy.

NCUA and the Supreme Court

There is a case before the Supreme Court this term that could influence credit unions’ options when they disagree with an NCUA action or ruling.

In the 1984 Chevron case, the Court’s decision gave deference to a federal agency’s interpretation, as well as enforcement, of the law.

As described below this precedent and the authority it gave federal agencies is now the subject of an appeal that might curtail the scope of that decision. The case is described below.

How Might this Affect Credit Unions

If the Court’s decision were to limit the agency “deference” practice  from Chevron, it would create better opportunities for credit unions to challenge NCUA actions.

A recurring example of the agency’s unilateral interpretations are its determinations of the adequacy of a credit union’s loss allowance and hence its net worth/PCA ratio.

A classic example is NCUA’s conservatorship of Arrowhead Central Credit Union in 2010.  The agency said the credit union was severely undercapitalized with a net worth ratio of only 3%.  However that ratio was because the agency disputed the adequacy of the credit union’s allowance account.  Examiners required significantly more allowance expense.  Subsequent events showed management’s original estimate was exactly on target.

NCUA celebrated the credit union’s miraculous turnaround in May 2013 pointing to a net worth of 10.5% up from the 3% estimate when conserved 36 months earlier. The situation was another example of regulatory misjudgments from which there has been no external appeal.

Ironically the legacy of this account’s over-funding continues today. Arrowhead’s coverage ratio (allowance account/delinquent loans) is 940% or roughly 800% higher than the industry average.

Even NCUA board members who interpret the law as they read it have no standing.   Board member Mark McWatters,  a lawyer, presented his legal analysis opposing  the agency’s risk based capital proposals as not authorized by statue. His reasoning was “overruled” twice by a simple board vote, 2 to 1.

Rebalancing Unilateral Decision Making

The Chevron precedent has inhibited credit unions from challenging NCUA’s judgments and actions in court.   For example the so-called merger of the TCCUSF with the NCUSIF to use the funds for natural person loses was specifically prohibited in Congress’s  legislative language with the bill.  This was pointed out to the board, the IG and  NCUA’s auditor in letters and formal comments, but to no avail.

Should the Chevron precedent be modified, it could result in a better balance between the judgments of the regulator  and the rights of credit union’s to challenge those determinations.

Agency deference

by Jonathan Turley, Shapiro Professor of Public Interest Law, George Washington University. (Jan 1, 2022)

While not often discussed with the “matinee” cases of the term, one case on the docket could bring sweeping impacts across various areas — from the environment to financial regulations to public health. American Hospital Association (AHA) v. Becerra raises a highly technical question of a U.S. Department of Health and Human Services rule that cut outpatient drug reimbursements to hospitals. The rule is based on an agency interpretation of vague statutory provisions — an interpretation that was defended under the deference afforded to agency decisions.

 The case is technically about outpatient care for Medicare Part B recipients; however, for some justices, particularly Samuel Alito and Neil Gorsuch, it is all about Chevron and agency deference.

 Chevron USA Inc. v. Natural Resources Defense Council Inc. is a 1984 administrative law case that has come to embody the role of federal agencies in not just enforcing but creating law. The “Chevron Doctrine” has insulated agency decisions for decades from substantive review, giving federal agencies an overwhelming degree of authority in our system of government.

 For some of us, the dominance of federal agencies has become equivalent to a fourth branch of government. The question is whether a critical mass has formed on the court to substantially curtail that decision. If so, AHA v. Becerra could be a torpedo in the water for the Chevron Doctrine.

Member Voices After Being Merged

In June 2018, the NCUA board approved a new merger rule.  The rule was extended to all FISCU’s because the agency believed there were safety and soundness risks if a merger was not done in the members’ interest:

For example, members of a merging credit union who discover, after the fact, that they were inadequately informed about the details of the merger may become disgruntled. The dissatisfied members could create bad publicity, creating a reputation risk for the continuing credit union. Unhappy members could also choose to stop doing business with the continuing credit union, affecting earnings projections.

In contrast to commenters’ assertions, the statutory factors the Board must consider in granting or withholding approval of a merger transaction include. . . the general character and fitness of the credit union’s management.

Members Reacting Post Merger

There is no “after the fact” process for NCUA to learn members’ reactions to the merger of their credit unions.  The following  comment posted on January 14, 2022 to Just a Member is an example of one reaction:


Recently, Teresa Freeborn has left Kinecta to manage her Daughter’s Business interests.  The merger of Xceed FCU and Kinecta was a disaster.  After months of wait, the transition was a bust.  Poor customer service.  Problems with online access and mismanagement of credit cards from XFCU visa to Kinecta Mastercard.  I paid off my Visa and the balance rolled to the unactivated Kinecta Mastercard.  I had to file a complaint with NCUA to get it resolved.  I have now closed my accounts and ended an over 40-year relationship with XFCU.  I have found better banking deals at BOA and Citibank.  I think you have made a smart decision, Teresa Freeborn, to exit credit unions after protecting your interests and abandoning the Credit Union members!

George E. Skelton

Today’s social media options provide multiple sources for members’ post-merger experiences.

When PenFed merged with Postal Employees in Madison Wi, in April 2021 the following comments were provided about the subsequent service:

August 30, 2021

Lousy place. Abusive. Fails to do what’s requested. Online phone help just as bad. Says being done but not. Waited 65 days for free personal checks that never showed. Still waiting for refunds and account closures. Worse place ever in my 45 years of banking. Local Person at Madison Wi extremely abusive. Place needs to be shut down. Don’t waste your time here. Consider a class action lawsuit.

August 24, 2021

POOR customer service…..so impersonal….hate being treated like a number and not an individual.

PenFed’s Merger with Miramar FCU

Years after the May 1, 2017 merger between PenFed and Miramar FCU, members continue to compare their post-merger service to that received prior to the event:

February 8, 2021

The employees here are nice but the service is not efficient – employees do not know procedures for certain requests or processes. When it was Miramar FCU the staff were more equipped to answer questions and work through solutions with members.
Also, the hours are incorrect. Penfed office of Miramar is closed and there was no update on the website nor any message to inform members. Penfed, please update your information on your website and your employees on procedures. 

July 31, 2020

It is 1245 on a Friday afternoon and the hours are stated that you are open until 1pm. so why is no one picking up the phone? have been on a continuous ring and redialing for the 15 minutes, until 1 pm. a business is supposed to answer it’s phone. this never happened to me in the the days of mfcu.

Brad Hines
April 9, 2020

This was a topnotch organization when it was Miramar FCU. Since PenFed took over there’s been a complete overhaul of the staff – and not for the better! I’ve had numerous times where tellers have made mistakes, or they just didn’t know what to do and had to ask for help. Most recent situation was transferring a large amount of funds out of a CD that had matured. The teller didn’t know the procedure, so had the manager come over to help. She explained that my best course of action was to put the funds into a “premium” savings account which yielded decent interest. I authorized this, and the teller made the transaction (after the manager had left). Several days later I just happened to check my account online only to see that that large amount of $ had been put into a “regular” savings account that had very poor yield. Fortunately when I called the national help desk they were able to fix this – but what a gigantic error and problem this would have cost me if I hadn’t discovered it!

A member’s report of service at a former branch of Ft. Belvoir FCU, now merged with PenFed, and the credit union’s response:

Chandra G a month ago

I would like to say that I was so hurt when I left the PenFed on Davis Road. A teller was helping me with an issue. I needed a letter to send to my other bank so she had to refer me to a manager. Before I went into the office, I told the teller that I needed that document back when they were done with it.
By this time I was walking in the office with a manager and a member service representative. The teller is so kind so she wanted to tell the manager that I needed the document back. Before she could say anything, Regina Lawton told her, “you don’t need to be in here. Go back out there.”
She then repeated it two more times, “You don’t need to be in here. Go back out there and help them. You don’t need to be standing in here.”

The teller was just attempting to tell her that I needed the document. She was providing excellent customer service!
I couldn’t imagine working for Regina Lawton. If you speak to your employees like that in front of customers, I can only imagine how you speak to them privately. TERRIBLE
Also, the teller DOES NOT know
I’m reporting Regina Lawton. I went to my car, after the incident, and my conscience wouldn’t allow me to leave knowing someone is being treated like this.

Response from the owner a month ago

Hi Chandra, thank you for bringing this to our attention. We will share this with our branch leadership team. We appreciate your membership and feedback.

Google reviews of PenFed’s merger with a Georgia Credit Union

Yasmin 4 days ago NEW

No customer service whatsoever. I’m a patient person so I waited 30 minutes to eventually walk away and take my business somewhere else. But what I don’t tolerate is when you have 2 customer service reps just staring at the group of people waiting for membership services. No, we will be with you. No, thank you folks for your patience. Just no acknowledgement whatsoever or managing expectations. Then for some reason, they were done with the prior members, it had been about 10 minutes, and they didn’t come for the next group. Not efficient at all. So rude.

Jason Boyd 3 weeks ago NEW

This is a federal credit union that is united but you can’t do business with your other credit union accounts (such as safe federal credit union) unless you have an account with them directly. Not only is that greedy but a poor business model. I will never bank with you and I will make sure no one I know does either. Oh, and thanks for the 15 minute wait for nothing too btw.

Where’s the Problem?

NCUA’s statement that poorly done mergers create bad publicity and soundness risks affects more than a merging credit union’s members.   The reputation of the credit union system is stained.

But the problem is not just badly executed mergers.  When mergers are pursued as an acquisition strategy, institutional ambitions easily become more important than the members’ best interests.

There are fundamental gaps  in NCUA’s oversight  of its merger rule.   Board member Metsger stated at the time of the revised rule:

“Our focus is on ensuring member interests are protected through the regulatory process.”   

However efforts to protect member interests are not evident in NCUA’s supervisory oversight. Egregious self-dealing and hollow future benefit promises are routinely approved.

The member comments above are indications that something is amiss in regulatory oversight.  A later blog will provide some examples of self-dealing, at the members’ expense, routinely approved by the agency.








Managing the NCUSIF-Is It too Late to Act?

What should credit unions do when the regulator who makes the rules, does not follow its own rules?

Yesterday the consumer price increase for calendar 2021 was reported as 7%, the highest in 40 years.  This was not a surprise.   Concern about increasing inflation and the Fed’s response had been growing since the summer of 2021.

Interest rate risk is not a new topic. NCUA first proposed adding an S for sensitivity  to the CAMEL rating in 2016.  In October 2021, the board approved a rule adding this “S”  with Chairman Harper saying:

The NCUA’s adoption of the CAMELS system is good public policy and long overdue.  Separating the liquidity and market sensitivity components will allow the NCUA to better monitor these risks within the credit union system, better communicate specific concerns to individual credit unions, and better allocate resources.

The agency’s description of interest rate risk was straight forward:

The sensitivity to market risk reflects the exposure of a credit union’s current and prospective earnings level and economic capital position arising from changes in market prices and the general level of interest rates. Effective risk management programs include comprehensive interest rate risk policies, appropriate and identifiable risk limits, clearly defined risk mitigation strategies, and a suitable governance framework.

Ignoring its Own Rules

However Just six days prior to this, those responsible for managing the NCUSIF’s portfolio invested $1.0 billion (5% of the portfolio) at an average weighted life of 5.95 years and yield of 1.19%.

These investments actually extended the portfolio’s overall maturity from the month before.

This was a continuation of the robotic investing  the NCUSIF investment committee had followed since market rates had fallen to near zero in 2020.

In December 2020 question were raised about these investment decisions: What Is NCUSIF’s IRR Investment Policy? Is this a Gap in NCUA Board Oversight?  The article pointed out NCUSIF’s most recent investments included a 7-year fixed rate yielding only .45%.  Would any reasonable person make this investment at this point in the cycle of historically low rates?

In August 2021, the NCUSIF continued its market-tone deaf investing by placing $1.2 billion at an average weighted yield of .943% and life of 5.7 years.   The analysis pointed out that these decisions were hurting credit unions.  One immediate decision that month cost credit unions $42 million in foregone revenue over the next 7 years of that investment’s life.

At the same time, credit unions in contrast, reported keeping 53% of their record level of investments in overnight funds.

Who Makes These Decisions?

The NCUSIF has an investment committee of four people including the Chief Financial Officer, the Director of E &I, the chief economist and the head of the Capital and Credit Markets division.

NCUA preaches interest rate management,  but does not practice it.  One doesn’t have to run a stress test to see the devasting results  of these recent decisions. The  NCUSIF’s monthly data documents the decline in portfolio value as rates began  rising over the past 12 months.

In September 2020, the $17 billion NCUSIF reported a market gain of $586 million. In October 2021, the latest report available, this had fallen  by 97%, to just $16.2 million on a portfolio $20.3 billion.  Large portions of the most recent investments are now worth less than their purchase price.  These low yields will hurt the NCUSIF’s performance for years to come.

Who Is Responsible for this Performance Failure?

The NCUA board receives a monthly report on the NCUSIF and a quarterly in-person update.

In questions about investments as recently as December’s meeting, staff’s response is they are just following Board policy.   In the September’s 2021 board meeting the CFO agreed to make public this investment policy.  It didn’t happen.  Several meetings later, he explained the policy was under review and would not be released until that was completed-at some indefinite time in the future.

The Board unanimously approved the new interest rate sensitivity rule in October 2021, which was first published in March.   It receives the monthly report showing the robotic investment activity and steadily falling portfolio values.  The board’s  words and deeds are far apart when it comes to IRR.

The Costs to Credit Unions and NCUA

When the agency’s highest professionals show an inability to manage the agency’s largest asset, the $20 billion NCUSIF, in accordance with its own rules on interest rate sensitivity, fundamental questions are raised.

Are senior staff competent for this task?  Are these investments what the Board really intends with policy?   Is no one in the agency,  staff or board, able to see the damage this causes to the fund’s revenue and its financial soundness?

Good judgement comes from experience.  And experience?  That comes from bad judgement. How many more bad judgements does the board need?

More than the NCUSIF’s future is at stake, as important as that is.   This year-long example of failure to respond to the changing economic conditions in managing the funds, begs the question: Is the agency capable of overseeing this issue in credit unions?   The IRR monitoring of the NCUSIF is simple.  In most credit unions the issues are much more complex.

Both the NCUA board and senior staff are letting credit unions down.  Sooner or later the bill for this failure will come due.   A simple portfolio yield of just 2% on $21 billion is sufficient to cover the normal financial expenses in the fund.  When these investment decisions lock in rates of 1% or less for 5 or 6 years, a premium may be required to pay for the damage caused by poor management.

If this failure is the outcome for the simple management of the NCUSIF’s IRR, the bigger issue is whether the agency has the grasp to properly monitor the industry through the coming rise in the interest rate cycle.

The first test will be what the leadership does about their responsibility for the NCUSIF.  Will the board and senior staff continue to kick the can down the road, blind to the consequences of inaction, or make a difference now?






A Reflection on the Anniversary of the January 6th Attack

Today is the one-year anniversary of an attempt to overturn the 2020 presidential election by mounting a physical assault on Congress’ certification of the electoral college vote.

There have been and will continue to be newly researched and passionate reporting about the day’s riot and events before and after.

One well-reasoned analysis is a short essay entitled A Day of Infamy, a year later.

I agree with this viewpoint but want to suggest another lesson. Does a latent January 6th gene potentially exist in anyone in authority? Or are required formal processes and structural checks and balances sufficient to inhibit such leadership temptations?

Everyone Experiences Authority

The crime of Trump and his followers was an attempted coup to overturn  legal and fiduciary  norms of governance and accountable behavior.

Most Americans have or will occupy positions of authority by election, selection or  demonstrated merit.   For example, most households have a dominate wage earner; sports teams-a chosen captain; each church or non-profit–volunteer boards; and coops led by elected directors.

Every public employee, whether by employment or election serves a constituency to which they should be responsible.

Positions of public authority can bring out the best or sometimes, the worst in people.

Bucky Sebastian and Ed Callahan’s decades long relationship showed the vital role of a leader with the right complementary partner.  Ed was an educator, football coach, administrator and powerful motivator–a person skilled in the arts of leadership.

One of Bucky’s important adjunct roles was to be Ed’s “counter-ego,” able to challenge his too emotional reactions to people or situations.  When Ed was tempted to counter someone using direct authority (as a football coach might call out), Bucky would confront him urging he should change his approach versus blaming the other.

Every leader needs a Bucky-like figure when inclined to follow their autocratic instincts in exercising power.

Many adults will achieve authority in an organization through personal ambition and effort, whether that role is paid or volunteer. Once achieved, there is a natural belief in the correctness of one’s judgments whether based on vision, factual analysis or using the rationale-that’s why I was chosen (or elected). 

The Unique Role of Public Servants

This is especially true in governmental employment. Trump’s authoritarian excesses and public delusions are consequential because of the ultimate power and responsibility of the Presidency.  Many believe he subverted the very premise of American democracy with his lies about the 2020 election outcome.

He ignored traditional formal processes.  There were no longer guardrails the public could rely upon.

Whether elected, appointed or selected through competence, public responsibility is always paired with assumed and/or explicit authority.

From parking enforcement, collecting taxes to setting rules and overseeing them, public roles are different in character from private employment.  There is an implied common duty, but often accountability is diffused or lacking.

Regulators of Cooperatives

I believe the Jan. 6th gene is ever-present, latent much of the time, but always ready to be activated in regulatory actions.

The symptoms include unilateral policy diktats, dismissal of inconvenient facts, neglect of administrative oversight, lack of transparency, and most critically, an unwillingness to work mutually with the credit union system.

This authoritarian impulse is most easily seen when those new to the organization first experience the culture.  Mark McWatters joined the NCUA Board in August 2014. He described Chairman Debra Matz’s leadership of NCUA during  in a public speech  several months later:

“NCUA should not treat members of the credit union community as Victorian era children—speak when you’re spoken to and otherwise mind your manners and go off with your nanny—but should, instead, renounce its imperious ‘my-way-or–the-highway’ approach and actively solicit input from the community on NCUA’s budget and the budgetary process. With the strong visceral response within the agency against budget hearings, it seems that some expect masses of credit union community members to charge the NCUA ramparts with pitchforks and flaming torches to free themselves from regulatory serfdom. I, conversely, welcome all comments and criticism from the community. 

Regulatory wisdom is not metaphysically bestowed upon an NCUA board member once the gavel falls on his or her Senate confirmation.

NCUA should not, accordingly, pretend that it’s a modern day Oracle of Delphi where all insight of the credit union community begins once you enter the doors at 1775 Duke Street in Alexandria, Virginia.”  (source: CU Today May 19, 2015)

McWatters is a very conscientious individual, courteous in manner with a rational temperament. He approached decisions using detailed legal and logical analysis.  His reaction to Matz’s autocratic style only corroborated what credit unions had experienced for years, since the Great Recession and unilateral liquidation of corporates.

The irony is that when McWatters became chairman in January 2016, the agency’s “Stockholm syndrome” effect had overcome this initial misgivings. In 2017 he merged the TCCUSF surplus into the NCUSIF to pay for natural person credit union losses, despite explicit congressional wording against this.  When explaining the action, he also admitted circumventing the FCU Act’s limits on premiums.

My immediate concern is that Chairman Harper, who was Matz’s Senior Policy Advisor and protege, also embraces her view of leadership.  He has shown by temperament, in board meeting exchanges, and prior actions as senior advisor, that he is not a person who should be leading the cooperative regulatory agency.

His primary justification for policy is because that is how the FDIC functions. I have described these positions with his own words  in several articles.

At a time when credit unions are transforming their roles with members due to Covid, Harper’s top priority imposed the hoariest and least relevant of all rules, a 28% immediate increase in minimum capital requirements.  Unlike McWatters when confronting the same issue, the current board members blinked and approved this regulatory tax on members and their credit unions.

The Jan 6th Gene and Credit Union Democracy

NCUA’s performance matters because it regulates  one of the unique features of cooperatives—the industry’s democratic, member-owner governance.

The concept that credit unions are democratically governed is misleading.  Few boards are elected today; most continue through reappointment and renominations when terms expire. Members’ involvement is not sought or encouraged. The idea of a contested election with more nominations than open seats is scary for incumbent directors.

Members are routinely requested by CEO’s and managers to give up their charter via merger for a rhetorically better credit union that members do not know and have no part in choosing.  These same “votes” frequently approve significant monetary handouts to departing senior staff who arranged these sales.  In one case over $35 million of self-funding was set up by a former CEO who continues working at the merged institution.

Even the hint of an external director nomination by petition can cause a credit union to change its bylaws to prevent such an occurrence. Pentagon FCU did this immediately after a successful at large nomination.

Credit unions in these actions are following the unilateral leadership style they see at NCUA.

Democratic Practice in National and Local Arenas

Leadership responsibility does entail authority and explicit processes to function.  How that authority is implemented is fundamental to the sustainability of the enterprise. Whether that is the American democratic political experiment, or a cooperative charter founded generations ago.

The fate of America may feel bigger than any one individual can influence.  But democratic norms and duty are not limited to the Congressional and Presidential elections. It is a skill each can hone whenever we participate in an organization’s governance or membership

The first place to ensure democracy remains meaningful is in the arena s of our participations, no matter how great or how small the organization.

As I consider the January 6th assessments, my hope is that anyone who might carry a gene of this kind, will keep it dormant by exercising democratic efforts in those local and national arenas  we care about.




Reflections on December’s NCUA Board meeting

No exact count is available, but close to 1,000 pages of staff material including BAM’s, budgets, proposed rules and other supporting material were provided NCUA  board members for December’s meeting.  The material was for decisions having, I thought, great moment for credit unions’ future.

Discerning what matters in such an output in the 5-10 working days when staff’s final versions are delivered is an impossible task.  Decisions are made and priorities set, not by rational debate or objective facts, but fatigue overload.

The so-called “bipartisan” vote is cast because there is no way to develop alternatives. Process overwhelms the participants unless you’re the one in charge of the process.

Here are two reactions about the meeting’s outcomes:

From a longtime colleague:

The slow but steady March to oblivion continues.

There were 18,000 credit unions when I started. Are we under 5,000? And over 1/3 of them are under 50 million.  It used to be 80% of the assets in 20% of the credit unions. Is it 90/10 by now?

You’re 77, I’m 70. The question is “will credit unions outlive us, or will we outlive credit unions?” I’m going to eat well and go to the gym to increase my chances.

By Elon Musk:

Rules and regulations are immortal. They don’t die. And if more rules and regulations are applied every year and it just keeps growing and growing, it just takes longer and longer and it’s harder to do things. (from WSJ interview).

If I heard correctly during the meeting, one part of the new RBC rule dealing with goodwill has a 2029 expiration date. In this case immortality is only ten years.

If Only in My Dreams

My first reaction to the meeting was deep disappointment for both credit union leaders, their members and NCUA directors.  Decisions were disconnected from reality and relevant data.  Political agendas set half a decade ago were now being imposed by fiat, not need.

During this time of year in 1943 during WW II, one of the most popular songs was Bing Crosby’s  I’ll be Home for Christmas. It begins:

I’ll be home for Christmas
You can plan on me
Please have snow and mistletoe
And presents by the tree 

The final stanza:

Christmas eve will find me
Where the love light gleams
I’ll be home for Christmas

If only in my dreams

The melody is memorable; however, the meaning is quite somber. The reality longed for will be just a dream.  Until the bigger events involved are over and life can once again be lived on terms we are free to choose.

In our life’s most earnest commitments, usually work or family, we continue to long for the best. That “feeling of being at home” gives us satisfaction and meaning. We use our creativity to achieve this sense of purpose, where we truly feel comfort.

I slowly realized my and others’ disappointment with the Board’s actions were from my thinking NCUA was “home” for credit unions.

A Mortuary Is Not a Home

The “home” credit unions pursue is their side-by-side journey with the members. It is not a set of rules promulgated by a government agency.  NCUA is no home for credit unions.  Its primary role today is as the mortuary for credit unions.

Looking to NCUA to understand the aspirations of credit unions, their members’ longings and the power of cooperative design is “only in your dreams.”

Hope is intrinsic for life to have meaning.  That is what credit unions at their very best try to deliver in every member relationship.

My error was believing that NCUA leaders might also share that same goal. The meeting was a slap of cold water in my face, an important reality reminder.

For that I am grateful.  It is credit unions that bring members the “wonderful life” this time of year, and all year round.  As the angel Clarence says to George Bailey: “Each man’s life touches so many other lives, and when he isn’t around he leaves an awful hole, doesn’t he?”

NCUA’s primary capacity is creating  holes.

Credit union’s strength is because members believe this is their own financial home which they can trust.

That financial reality is not based on new rules, budgets or even a guardian angel fund.   Instead, it is created from loyalty and relationships built over decades, or what, at this time of year, we call Goodwill.

Today’s NCUA Board Decisions: Encouraging Credit Unions to Help Members Succeed or Adding More for the Regulator

There are two weeks left in the year.  But we already know that in the second year of pandemic pivots and uncertainties that credit unions have again and again responded to urgent  member needs.

Daily reports of year-end bonus payments and record levels of loan re-financings are adding  millions of dollars to member’s wallets.

While yearend NCUSIF numbers are not yet complete, it appears this will be a second year in a row of net recoveries and no insured losses.

But America is not out of the woods.  Covid continues to play havoc with well laid plans.  Interest rates will go up.   Both costs and prices are in a rising phase-no one knows for how long.

2022 looks to be another year of “transitions.”   To the office or not.  More virtual or hybrid meetings.  Continued efforts to find the right employees.  How can we save costs.

The Environment for Today’s Meetings

The notices below in the DC’s Union train station and a vending machine in a hotel capture what the ordinary person is dealing with in this uncertain economy.

These are glimpses of the  external context for  NCUA’s decisions that will set agency’s spending pattern and priorities for next year.

Will the board’s decisions inspire credit unions to do even more for their members especially those who are vulnerable still?

Will the last two years of virtually no NCUSIF losses encourage the board to adopt the historically proven 1.3% cap and reaffirm the NCUSIF’s long proven cooperative design?

Will the enormous burden and cost in member value of a CCULR/RBC implementation be paused or even tabled, while more data can be gathered about the benefits it is supposed to bring?

The NCUA board is facing hard decisions.  Will they recognize the unique challenges for credit unions to do more for members?  Or more for NCUA?



“No Wonder We All Are Bored with NCUA Board Meetings”

This week I asked my good friend Randy Karnes for his perspective  on the upcoming NCUA board meeting (12/16/21). Here’s what he had to say:

Chip hoped that I might inspire the NCUA board to consider its agenda differently; to move away from the agenda’s details and towards activities that would craft a new expectation for us all.   

NCUA and its governance needs to focus on bigger issues. Issues that inspired owners. Issues that made business fun for those who derive  meaning from their efforts. Issues that extended value so that the everyday owners, and professionals reporting to them, would care about board meetings and NCUA’s  oversight functions.

He hoped the three politically selected directors would consider that we need more from the regulator.  We want a group that cares about our professions, our ideas for governance,  and our safety nets.  That the credit union-funded institutions at NCUA are still there to back our plays, our efforts, and our belief in the work ahead.

So I read Chip’s 12/13 blog as the inspiration for my comments, but only found the inspiration to declare I understand why no one gives a sh*t anymore.

Here’s what we’re looking at for Thursday; an agenda that claims we should be paying attention:  Got to wonder?

Multiple issues with the RBC/CCULR capital regulation, a topic of great concern that will affect the CU industry for years to come – a bureaucratic press headline and a staff that cries wolf.

    1. Lots of numbers (NCUA/FDIC) – far from any consequence for those locally looking for numbers that will sustain them.
    2. CU’s have already maintained enough dollars for last few “so called crises” – but who would waste a crisis yet to come?
    3. Is it credit unions  or the NCUA Board  who is focused on “change for change” to their own ends – we see no need for any capital change.
    4. Why trust their “ends” at all, no wonder we all are bored with NCUA board meetings, they are not for us and we hear no mention of us in their words or declarations.
    5. More reg burden for the sake of burden. Another option for NCUA to leverage their situational control of our members’ futures. These new tools are ineffective and simply clutter other work that screams for action.
    6. Confusing stats for the sake of stats, oil and water displays, confusion just to take our eyes off the ball – member value.
    7. Member faith in NCUA thinking is muddled by over wrought academic complexity.  No workman’s simplicity in this group, that would take experience; a care for the work.

Now shift to the budget item.

The next budget is just another edition off  an assembly line of budgets – cranking out ugly babies with no mirrors in sight. More spending wanted, when less would send a message of hope and clarity.

    1. Planners who expect a rising  curve of more money in this to the next year, to every year – void of awareness from past exploits or value adds.
    2. More people to pad our importance, to enhance processes now un-manned, and with no plans for when needed. We need more people without recognizing there are none to be had.
    3. The budget is not about the flow of our industry and the requirements for its sustainability.  It is simply to ensure the NCUA outlasts its ward, that the NCUA is the last group standing.
    4. The industry’s funds are always there to direct, and NCUA will always be  quicker, slicker, and quietly positioned to direct those funds from members’ activities to a bureaucratic engine fueled by money.
    5. Just give us more, we are hungry.

These are the “minutes” for the 12/16 NCUA Board meeting,  ahead of time, a template of expectations from a bored audience of the industry’s CU members – customer-owners who wonder why the value of ownership has lost its punch.

But the funny thing is we all really do still give a sh*t! We are hungry to believe, follow, and to give homage to the NCUA’s efforts if they would simply find the heart to sell us that they still have the will to deliver value to our members. The heart to simply believe in the work of cooperatives. The heart to inspire us with the simplicity of a local community’s effort to lift itself up by work well done.

I know that Chip wants me to declare that 12/16 is a day for us to rally our voices and take on these tactics from the agenda – to shout we give a damn about RBC/CCULR or the board’s broken budget processes, but I can’t.

The only goal I have for the NCUA’s board and bureaucrats is to work harder, and work smarter to bring back those days when we waited in earnest to read the press reports of an NCUA board meeting. To read the reports ready to smile with the effort and the intent that made us believe we had a valuable ally for our futures.

It’s not that America has given up on its institutions that ensure our success; rather we simply forgot how to promote  leaders for these institutions whose roles are to guard and foster our efforts. We need to change how NCUA board members rise to the occasions ahead.

Too many times these directors have started out as lame ducks….and it has nothing to do with their terms. Lame work is becoming the standard.

Tell Me Why I’m Wrong.


Tomorrow’s NCUA Board Challenge:  A Turning Point of Just More of the Same?

Most individuals and organizations  realize at some point in their journeys,  that money does not guarantee success.  Nor happiness.

Thursday’s NCUA Board is, at first glance, all about money.  Tens of millions.  And how it is to be raised, allocated and spent.

Since all NCUA’s funds are from credit union members, it behooves we all pay attention. For NCUA has no other revenue. It is the steward of almost $400 million in annual costs paid by members.

The Board’s financial decisions on Thursday  include:

  • The size of NCUA’s annual and capital budget spending;
  • How these costs are allocated (OTR) between the CLF, NCUSIF and Operating Fee;
  • The limit, or cap, on the maximum relative size of the NCUSIF via the NOL, after which a dividend must be paid;
  • The disposition of the approximately $100 million in surplus retained in the Operating Fund from excess FCU annual fees collected over recent years.
  • Even the proposed CCULR/RBC rule is about money, not just burden. It would require credit unions to retain from revenue initially as much as $26 billion more in reserves that would otherwise be available for greater  member value and service.

All About Money, or Is It?

The justifications for the amounts NCUA is seeking, is that the regulator’s financial resources are what sustains a safe and sound movement.  More financial resources enables more effective supervision.

This leadership approach is a fallacy.  It is often used to explain NCUA’s and even many  credit union decisions.  Institutional strength or capability is measured by asset size, by net worth ratio or for NCUA, the annual spend or dollars on hand.

Resilience Not Resources

However, over and over again especially this year, events have shown that resilience is a leadership characteristic, not the amount of resource an organization controls.   Credit unions with double digit net worth, managing hundreds of millions, even billions, are routinely merging saying they lack the resources to cope with future challenges.  That is a leadership failing, not a resource gap.

Every credit union in existence today was started with no financial capital.  They survived, prospered, and thrived because of volunteer sweat equity, sponsor support, member self-help and shared belief in their purpose.  In other words, leadership.

These critical intrinsic motivations are being replaced with an assumption that more and more dollars are the key to survival.   The thought that resilience depends on more dollars cuts against the grain of what a coop financial system is and can be.

This reasoning is used by some CEO’s who end their tenure with mergers accompanied with large added retirement or financial bonuses.  Greed not gratitude becomes the hallmark career-end.

Who Will Credit Unions Become?

How the Board decides the issues before it tomorrow will send a clear message who they believe credit unions are today and what they will become in the future.  Will it be about more money for NCUA or an effort to inspire credit unions through careful stewardship of their resources and decisions based on objective data?

During the past two years of the pandemic credit unions have shown their best side.  Waving fees, making loan adjustments, lowering charges, and being with members or in person no matter the severity of the epidemic.   The growth in member savings and bottom lines have resulted in back-to-back record setting outcomes and zero NCUSIF insurance losses.

Daily credit unions are announcing bonus dividends to members to share their success in the millions.

The board’s decisions on resources will communicate their view of whether credit unions are special kind of financial service provider that warrants further inspiration, or just a minor-league version of banking.

Will the board present made up worries and projects lacking outcomes to support funding?  Will it succumb to temptation to offer unknowable future risks to retain unneeded reserves?  Will it affirm the idea that every credit union must stand on its own bottom—no system safety nets or mutual support in the event of problems?

All for One and One for All?

Credit union’s manage people’s money to promote other member’s financial opportunity. The well-being of one is linked to the well-being of all.   The same approach has, in the past, applied to credit union’s intra-dependent cooperative system design.

The result is credit unions are much stronger than individual numbers alone would ever indicate.  The member relationships, based on a premise that this financial community will help ones neighbors, creates goodwill and loyalty creating value that far exceeds  financial ratios.

Credit unions are a classic example of American innovation with leaders that have attracted  tens of millions of adherents or fans, called members.  It is self-help, self-financed and self- governed, formed from the grass roots and built on community respect.

A Contradictory Stance On Credit Union’s Role

The NCUA board has represented a different portrait of the system.  In the past decade, NCUA’s priorities suggest credit union’s meaning and value is measured primarily by how many dollars are on the  balance sheet and in net worth.

The whole theme is to get more.  There is no underlying recognition about the practical life of the members or their credit union’s role.  Such a world view cannot inspire the movement let alone feed the soul of  members.

NCUA’s increasingly dystopian views augmented by faulty analysis and misleading numbers blinds them to see what they can’t see.  NCUA no longer see credit unions as they are, because NCUA see things as they are.  They no longer seek information that would change their approach;  rather they look for a story that confirms what they already have in mind.

NCUA’s decisions rest on a simple falsehood that more is necessary rather than a more  complex reality.  Resilience and credit union success is not built on financial performance, but by leaders imbued with purpose and community well-being.

Inverting Common Sense

Even worse is the proposed RBC/CCULR rule.  It inverts the legal maxim that bad cases make bad law. In NCUA’s  view a bad loss requires an ever more complex rule.

When NCUA approves a generally applicable rule like RBC to counter an extreme outcome or circumstance, the risk is that all credit unions’ freedoms are now restricted by the behavior of a very few.

The burden of the RBC/CCULR rule will fall directly on the membership, in the initial proposal by at least $26 billion.

Will the NCUA board respond to the incredible credit union performance during the pandemic for members.  Will it say, “Job well done?”  Or now is our time to get more funds?  Will they respect and recognize the documented track record of the industry since 2008 (reported yesterday) or will they continue to present misleading analysis and mythical future outlooks?

Whatever the outcome, it will set the tone and direction for years to come.  It is unlikely there will be a better time or circumstance for the NCUA board to affirm its faith in the credit union system, the performance of cu leadership during COVID,  and to restrain the never ending instinct  to acquire more resources.