Chip Filson
Today’s economic headline: U.S. economy grew at 1.6% annualized rate in the first quarter.
What does the number mean? Here is a cautionary note:
Economists, businesses and pundits spent last year predicting a recession that never happened. How could so many get it wrong?
The bottom line: Predictions about the economy are more about what’s going on in the present than what will happen in the future. (Axios)
I. The history of the overnight Federal Funds rate from 1954 through 2022 is shown in the chart below. The sixty-eight year average: 4.62%. The latest update for March 2024: 5.33%.
Source: Fred.stlouisfed.org/series/fedfunds
II. Interest payments on US Treasury debt surpasses a trillion dollars in 2023. The total interest paid last year was $1,062 billion.
From the Visual Capitalist article: “The cost of paying for America’s national debt crossed the $1 trillion dollar mark in 2023, driven by high interest rates and a record $34 trillion mountain of debt. . . As debt payments continue to soar, the Congressional Budget Office (CBO) reported that debt servicing costs surpassed defense spending for the first time ever this year.”
A final selection from He Gets Us campaign. The use of stories to communicate values.
Cooperatives are designed around specific organizational principles and values. The phrase people helping people is the classic assertion of the credit union difference. But how can this value distinction, if real, be communicated?
Many organizations face this challenge, especially, those committed to doing “good” in society. Take the example of showing love.
Everyone has a love in their life. In many instances this is another person-spouse, friend or soulmate. In other circumstances it might be a longtime pet. Or a passion so intense that it animates everything a person does-a lifetime committed to living a specific truth.
The word love is used in many circumstances and about many activities.
How can this concept be communicated in art?
He Gets Us created an AI animated video with the prompt “imagine love”. The result is a series of impressionistic heart shaped valentine-like drawings overlapping the page.
The program’s users then added a series of prompts. These directed that love be shown the way Jesus talked about it-to feed the hungry, help the sick etc. The result is a compelling series of tableaus that show specific scenes any viewer would recognize.
This artificial translation communicates. Some drawings may even inspire. In these visualizations, love becomes an act, not just a feeling.
This brief video’s AI interpretation vividly contrasts the difference between belief and action.
Are these creations art? Or merely automated serial productions? Do they have meaning?
If this exercise seems too artificial, then ask, how is it you show your love? For that is the question presented.
The AI exercise illustrates the difference between what we say and what we do.
This is a challenge all face daily, especially when leading values-based organizations.
Leaders in families, in organizations, or in life’s many daily roles know the difference illustrated in the video. For credit unions that is when people helping people is more than a slogan. It becomes the animating spirit motivating interactions with members.
(https://www.youtube.com/watch?v=cUngI7QyeHY&t=3s)
The video series He Gets Us relies on multiple methods to communicate a vision of common humanity in an era of cultural turbulence.
It was funded by a group of Christian business leaders who were concerned about the relevance of spiritual values in a time when even religious communities have become part of the current impulse to take sides on every topic.
The videos push against this social divisiveness. Several were among the most watched ads from the last two Super Bowls, an effort that some felt was not the best use of funds.
They are intended to be a conversation starter. To build a bridge to a culture increasingly dubious about the role of spiritual values in contemporary life.
The group’s longer first-person, authentic life stories are memorable. This five-minute video is an example of a mother and her family’s unconditional love. Most of us have had the good fortune to experience this relationship as either a child or as parents. But perhaps not with the burdens this family encountered.
The video suggests our lives are not just a series of insulated, unrelated events. Human stories reveal deep truths which we may know only in part. They sometimes “speak” to us outside our conscious awareness.
The mother’s story shows a life of purpose a goal for which many aspire. She tells of learning the necessity of humility, “how to set aside everything we know to honor, respect and love another human being.”
In doing so, it suggests all are part of the great human cosmic enterprise. Life comes full circle for everyone. This narrative expresses the belief that we live in a world grounded in shared meaning.
(https://www.youtube.com/watch?v=cl2fxQH50_8&t=225s)
This is a credit union’s story of caring for a member whose life has come full circle. You can read The Rest of the Story here.
(https://www.youtube.com/watch?v=0PXPcuGnAkc&t=31s)
On Monday I introduced the video series, He Gets Us. They were created by a group portraying the relevance of spiritual life today. The work presents pictures of our common humanity.
I believe these videos are works of art. They have the power to evoke an epiphany. We may not know the full wisdom being offered. But one can feel the experience connecting with something inside you.
My hope is to inspire an appraisal of today’s coop messaging. The goal is to move beyond the headlines and priorities of the current moment to rediscover the passions that made the industry a movement.
Today’s selections begin with what seems a simple task, asking nonnative speakers what are most difficult sounds for them to pronounce in English.
But then each person acknowledges the real question is about the words we find the hardest to say emotionally in human interaction. In any language. This short introduction is the source for five longer personal stories from each.
(https://www.youtube.com/watch?v=Whm_-aL9HmI&t=18s)
The final speaker is from Finland. The words he found hardest to say emotionally arose in very difficult circumstances.
They were: “I love you.” Saying them makes us vulnerable. A phrase repeated often by rote but still changes lives when stated.
His story sketches the growth in his understanding of this universal expression that enriches all human relationships. It begins with a trigger warning.
(https://www.youtube.com/watch?v=gWplgR3t_Ck&t=1s)
If you were ever curious about the difference between a state and federal credit union regulatory environment, the open public meeting of the North Carolina Credit Union Commission the past Tuesday, April 9, is an eye-opener. (It was online).
In 90 minutes a listener received comprehensive, transparent. and timely information from multiple presenters. The topics covered state and national legislative priorities by a League representative and a thorough state-of-the industry review for all 29 state charters (ratios with and without SECU) by the Commissioner. There were updates on the status of the state system: sixteen credit unions have the low income designation and one pending merger.
Administrative briefings on the Commissioner’s office including an examination update (one done, six in process, and 22 to go), examiner training and staff openings.
At the agenda’s completion, the chair solicited comments from the attendees. Credit union members presented concerns about the Administrator’s oversight of SECU bylaw changes. One questioned the Administrator’ support for House Bill 410 to change the operating authority for North Carolina state charters.
The meeting showed the accessibility and transparency of the state’s regulatory environment. All were welcome. It was an open town hall with democratic participation and citizen oversight.
One of the most interesting reports for me was by Fred Eisel, CEO of Vizo Financial Corporate which serves the Carolina market and credit unions in 40 other states. His information was timely, positive, and specific. Several of his points: liquidity is growing in credit unions with corporate shares up and borrowing by members down. Vizo’s financial results are strong enabling increasing returns for members. Credit union operations are stable.
However, the number that struck me was Vizo’s Risk Based Capital Ratio at March end of 125%–that is not a typo.
Vizo financials through February are posted on their website. It has extensive disclosures of balance sheet and income statement details, shows total available liquidity of $6.5 billion, and includes nine measures of capital adequacy.
Fred sent me the March 2024 numbers showing the 125% RBC ratio.
The NCUA’s RBC requirement for well-capitalized corporates is 10%. Vizo’s ratio is twelve times that standard. Moreover, the corporate’s total capital exceeds 10% of assets.
Vizo CEO’s presentation of March’s final data just seven working days after month end, is extraordinary. It is a disclosure practice documented with web posting, that every credit union might model for their members. The timeliness is a tribute to the credit union’s management. It is also a standard NCUA should emulate in its reporting of the three funds it manages for credit unions.
Coffee hit a 30-month high today. The commodity is up 16% so far this year. One of the reasons is a heat wave in Vietnam.
Cocoa has been soaring due to weather problems in Africa. Cocoa is up 150% so far in 2024. (source: stocks at Night by CNBC Pro April 11, 2024)
From my driveway by Luis Escalante who was repaneling my workroom in Bethesda, MD. Luis used my eclipse glasses to cover his camera lens.
From the shores of Lake Ontario by Scott Patterson, CEO Credit Union Student Choice.
His commentary on being in the moment: Clouds didn’t cooperate to see the sun much, but we did get total darkness for a few minutes. Very eerie. The expansive lake view let us watch the darkness line approaching across the water and then see the full daylight on land in the far distance. A thrilling experience.
During my college days five decades ago, the primary work-study jobs were dorm crew, dining hall or checking out library books. Students receiving financial aid were expected to work at least 10 hours per week.
As the decade of the 1960’s progressed, the college campus atmosphere inspired by the Camelot years of President Kennedy gave way to the increasingly anti-Vietnam war and civil rights movements.
New protest groups were spawned across campuses. These included SNCC, Black Panthers, SDS and multiple other efforts to support social and political change.
In a partial final year on campus waiting for my date with Uncle Sam, I saw a three-day occupation of University Hall and attended a student meeting where one of the participants placed a gun on the table to demonstrate his radical intentions.
Part of this campus mood was anti-business—all kinds, not just the protests against Dow Chemical or other business seen as supporters of war. Capitalist society was deemed responsible for the multiple wrongs protestors wanted to change in US public policy and social inequity. No one saw business, or entrepreneurship worthy of academic attention or support.
Still, students would occasionally use their university setting to develop start up ideas. One that became very popular in the ’60’s was Operation Match, a paper based computer analysis of questionnaires to provide participants names of potential dating partners. It was noteworthy, because it was an innovation that filled an ever- present social need.
For the past decade there has been a revolution in both attitude and support for students in higher education who wish to create new business startups.
All of the top universities now have on-campus organized support, including courses for students and faculty who want to start new businesses.
A February 24, 2024 article lists the 14 Best University Accelerators and Incubators for 2024.
Every listing is a top academic institution including Harvard, Duke, UT Austin to USC and UC Berkley.
Here is a description of MIT’s multi-option effort which is headlined with its $100k Pitch:
Amazon web services (AWS) now sponsors a nationwide competition for university based startups: “It’s no secret that some of the most successful startups were founded by members of the university community: from Ava Labs to Anyscale and InsightFinder, to name a few. At Amazon Web Services (AWS), we believe this is because students and faculty are often creative thinkers who are willing to take risks and collaborate with their peers—all essential qualities in a founder.”
“For current Harvard students, the Venture Incubation Program (VIP) within Harvard’s Innovation Lab fund is a 12-week program with mentoring and resources. Harvard’s Innovation Lab also hosts the President’s Innovation Challenge, where students can win funding money of up to $75,000 for a great idea. Judging criteria includes viability, empathy, rigor, ingenuity, traction, economics, and impact.”
Here in D.C. George Washington University sponsors an annual competition inviting students, faculty and their supporters to present business proposals and collect cash prizes and other forms of startup support and counsel.
Three finalists compete in one of four startup categories:
Consumer Goods & Services
Business Goods & Services
Social Innovation
Health Care & Life Sciences
Each finalist prepares a one-minute video of their business proposal. There are immediate cash prizes plus additional consulting and funding support:
Companies have one year to register as an LLC to claim the money.
To see these young entrepreneurs’ ingenuity, passion, and commitment I would encourage you to sample one or all of the 12 finalists’ sixty second pitches which you can find here. Several that were intriguing were Siyeh Tech’s entry to accelerate the “Speed of Peace” after conflict, In-Locater, and Goal Plus.
All of these business ideas are either conceptually complete, if not already in beta. George Washington’s New Venture Competition is one of many in the higher education community. This is not only an “educational” institution responding to students’ interests; in some the university benefits from partnering as startups go to scale backed with venture capital.
These competitions are not standalone events such as a campus springtime arts festival. These programs are supported by courses, different “labs,” seminars and lectures on the art of pitch preparation and visits by university alumni speaking on their business success.
These educational innovations are helping to spark an ever-renewing stream of new business ideas with support systems intended to foster success. Students are encouraged to jump into the capitalist world and perhaps reap fame and fortune.
Simultaneously a parallel change for venturing has developed for college athletes. They can now receive income from their Name, Image and Likeness (NIL) endorsements by private businesses. Caitlin Clark is not only Iowa’s leading basketball player, but she also appears in commercials while her games are being broadcast. She may be the first million dollar undergrad student-athlete.
Unlike my era in college, higher education is an active participant in American enterprise. What does this have to do with credit unions?
Cooperatives are missing in action. Students are not learning about personal finance from credit unions. Credit unions which have students in their FOM’s often see them as a secondary market opportunity.
Every company, professional sport franchise, consumer product, auto manufacturer etc. must resell its brand to the next generation of users. Or face the prospect of going out of business. Product loyalty, like religious observance, is not easily passed down in a family in today’s society of instant access and social media.
If credit unions miss this generation of college students, will they ever catch up as they move on in their careers and families?
In the 1980’s, NCUA played a very active role supporting new student led credit unions as described in this post. That effort is missing today.
Credit union’s absence from college and university campuses feels like a missed opportunity for attracting this generation of self-help innovators and strivers. How do coops become part of this new enterprise engagement by student entrepreneurs?
Humor and creativity can often help us understand what normal prose or logic cannot. Here are two contemporary interpretations of The Last Supper.
Source: Jared Brock, The Last Supper was 1991 Years Ago Tonight. Designer Microsoft’s Copilot.
(https://www.youtube.com/watch?v=sh8TovTZl8Q)
Humor expressing Easter’s hope and purpose in a modern idiom.
I recently subscribed to Reuters’ free daily Morning Bid U.S.
It is a succinct summary of key rates, economic announcements for the day and selected articles about important events. Today’s is the JOLTS report.
You can sign up here. It is one of 18 Reuters briefings. The latest market updates are short and the commentaries accompanied by clear graphs. Today also looks ahead tp Friday’s nonfarm payroll report for March.
A useful 60 second brief before reviewing the financial priorities in your credit union.
by Henrietta Cordelia Ray
There came a dove, an Easter dove,
When morning stars grew dim;
It fluttered round my lattice bars,
To chant a matin hymn.
It brought a lily in its beak,
Aglow with dewy sheen;
I caught the strain, the incense breathed,
And uttered praise between.
It brought a shrine of holy thoughts
To calm my soul that day;
I caught the meaning of the note,
Why did it fly away?
Come peaceful dove, sweet Easter dove!
Above earth’s storm and strife,
Sing of the joy of Easter-tide,
Of light and hope and life. (1910)
In a famous passage of Paradise Lost, Milton’s God acknowledges that He could have created Adam and Eve without freedom. But what would there be to praise? “Not free, what proof could they have given sincere / Of true allegiance, constant faith or love, / Where only what they needs must do appeared, / Not what they would?” (Source: Legalizing the Resurrection)