A Contemporary Father’s Day Parable

Most  are familiar with the Biblical story of the Prodigal Son.  It is from Luke chapter 15.

In brief: the younger son did not want to wait for his father’s death to claim his inheritance, and instead asked for it immediately.

Verse 13 tells what happens next:  The younger son gathered all he had, traveled to a distant country, and there he squandered his property in dissolute living.

Broke and hungry living with animals, he traveled home intending to tell his father in verse 19, “ I have sinned against heaven and before you. I am no longer worthy to be called your son; treat me like one of your hired hands.”

Instead of the expected reaction of “you made your bed, now lie in it” the father instead, “was filled with compassion and put his arms around him and kissed him.” (verse 20)

The Parable Today

How do you react to this picture? Like the father or the elder son whose response was: “I have never disobeyed your command; yet you have never given me even a young goat so that I might celebrate with my friends. But when this son of yours came back who has devoured all your property with prostitutes, you killed the fatted calf for him.”  (verses 29-30)

Lost and then found?  Compassion or condemnation?  Like all parables, this modern day event helps us see who we are.

Also a reminder on Fathers’ Day of who we can be.



What Credit Unions Can Learn From BND

Recently the Bank of North Dakota (BND) released its 2023 Annual Report of almost 80 pages.

The Report including the bank’s history (see excerpt below) is a creative example of an alternative financial institution thriving in the privately managed financial services marketplace in America.  Its ongoing success is the model for similar startups in other cities and states.

Founded in 1919, the bank is exempt from all state and federal taxes.  It is funded by receipts collected by the state government and its agencies.  There is no FDIC insurance but is backed by the state of North Dakota.

BND’s primarily lending activity is participation loans originated by the other financial institutions throughout the state.  It is a wholesale lender.   In 2011 when NCUA implemented new regulation requiring more member capital and reduced corporate operating and investment authority, the credit unions decided to close their corporate.  One of the factors was the option to receive much of the corporate’s  financing services from BND.

A Very Successful Year

The Dakota Credit Union Association has presented a summary of BND’s 2023 results. The highlights include total assets of $10.1 billion, record earnings of $192.7 million for a return on equity of 18.2%.

From the Association’s summary: The Bank originated and renewed 10,734 loans for more than $2.5 billion, bringing the amount of the total lending portfolio to $5.8 billion, a new record. The total portfolio increased by $394 million from last year. BND delivers both agriculture and commercial loans through 72 different financial institutions and their 218 branch offices. . .

In addition to these portfolios, BND administers more than $1 billion in legislative-directed loan programs, including school construction, state infrastructure, water projects and disaster recovery.
“Bank of North Dakota works closely with local lenders to ensure its programs are relevant and impactful,” said members of the Commission in a joint statement. The Commission, consisting of Gov. Doug Burgum as chairman, Attorney General Drew Wrigley, and Agriculture Commissioner Doug Goehring, oversees BND. “This attention to local needs is one of the reasons for the Bank’s success.”

A Bipartisan Embrace

Beyond the current success and its historical longevity, support for the Bank comes from leaders of both parties.  Gov. Doug Burgum is reportedly on Donald Trump’s short list of vice-presidential prospects.  Nowhere do we see opposition to this state-owned and managed financial institution that republicans or bankers in other states might call out as a “socialist enterprise.”  Its track record serving the agricultural, industrial and public financing needs across North Dakota has made it a vital component of state government.

The success of BND has spawned similar startups in other jurisdictions. The Public Bank of East Bay (PBEB) has hired a former Credit Union CFO, Scott Waite, to lead its fund raising and organizational efforts.  There is an attempt to pass state legislation for a city owned bank in Rochester, New York described in this June 3, 2024 article Why a Credit Union Wants the Local Government to Create Its Own Bank.

Both of these organizers cite BND as the model for their more focused local ambitions.

A Lesson for Coops?

BND’s longevity demonstrates the variety and innovative capacity of an open economy.   When NCUA closed down many financial options for corporates, other institutions were available.  Long time relationships and collaborative capacity were lost as the FHLB’s and other secondary market providers stepped up to serve natural person credit unions.

One might view these events as just the normal process of creative destruction that is a hallmark of competitive economies.  Or. it might illustrate that options are available or adaptable when existing institutions fail to fulfill their core purpose.

More History of BND

Page 11 of this year’s Annual Report provides a summary of the Banks founding.  Here is an excerpt:

If you lived in North Dakota in 1919, it is likely that you made your living as a farmer or rancher, or in a profession that supported farmers and ranchers. There wasn’t a great deal of economic diversity at the time.

When you put your grain on the railway to be delivered to an elevator in Minneapolis/St. Paul, you were given the most broken-down of the railcars, causing tons of grain to be lost along the way. You were paid for the grain that arrived in the Twin Cities, not the amount of grain you loaded in North Dakota.

You weren’t present when they tested your grain so you needed to rely on the elevator’s assessment, often thought to be more favorable to the elevator than the farmer. When a loan was needed, it most likely came from a bank in Minneapolis or Chicago, with interest rates in the double digits. It was unaffordable for most agriculture producers, and they barely squeaked by.

This set the stage for the Nonpartisan League to come into power, and as part of its platform, the 1919 North Dakota Legislature created the State Mill and Elevator, Workforce Safety Insurance, and Bank of North Dakota along with the Industrial Commission to oversee them.

North Dakota tax dollars would be used to support North Dakota residents. While it wasn’t the first or only state-owned bank to be created, it is the only one that has survived the test of time.

Crossing the Bar For Mortal Stakes

This 1889 poem, Crossing the Bar, by Alfred, Lord Tennyson has been quoted on many occasions in life’s passages:  graduations, changing vocations, marriage/divorce, and the obviousreference to life’s end.

I just attended my granddaughter’s college graduation at which a musical setting of the poem was sung.

Sunset and evening star,
      And one clear call for me!
And may there be no moaning of the bar,
      When I put out to sea,
   But such a tide as moving seems asleep,
      Too full for sound and foam,
When that which drew from out the boundless deep
      Turns again home.
   Twilight and evening bell,
      And after that the dark!
And may there be no sadness of farewell,
      When I embark;
   For tho’ from out our bourne of Time and Place
      The flood may bear me far,
I hope to see my Pilot face to face
      When I have crost the bar.

Student Observations on Crossing the Bar

The poem’s sentiment certainly matched the setting for those leaving the familiar shared college experiences to venture out on individual journeys. The two senior speakers spoke of this challenge when “putting out to sea.”

One asked: How do we locate ourselves in the big picture questions confronting society and hold ourselves accountable?

Another:  As we pursue our individual paths we underestimate the power of community; yet that is how we are able to emerge with the confidence to go forth. 

There was an aspiration in their words best captured in the final stanza of Robert Frost’s poem Two Tramps:

But yield who will to their separation,

My object in living is to unite

My avocation and my vocation

As my two eyes make one in sight.

Only where love and need are one,

And the work is play for mortal stakes,

Is the deed ever really done

For Heaven and the future’s sakes.

All of us will cross several metaphorical bars in our lifetimes. Often this arises from the never ending effort to find in Frost’s phrase work that is play for mortal stakes.
I believe that is why so many enjoy the credit union movement as a profession and doing good works serving members, “where love and need are one.”

Memorial Day 2024: Answering the Call of Duty

Two events of this past week reminded me of why America celebrates Memorial Day.  They are examples of persons responding to their sense of duty.

Campus Protests-A Long Tradition of Commitment

The multiple current campus occupations and graduation disruptions over the war in Gaza are not a new form of student activism. Here is a description of an earlier one.

In April 1969, Harvard University students protested the Vietnam War and other social and political issues with a two-week strike that included the occupation of University Hall. The strike began on April 9, 1969, when about 70 students entered the building, evicted administrators, and searched through files. The next day, at the request of President Nathan M. Pusey, police and state troopers forcibly evicted the students, arresting over 100 protesters for trespassing. 

I was present that April working at Harvard in the financial aid office.  As my colleague (a WWII veteran) and I walked through the Yard during the initial occupation, we wondered how it would end.

Ten days later I drove to Newport R.I. to begin four plus years of active duty in the US Navy.  (below at Pier side, spring 1970, Yokosuka, Japan on the USS Windham Cty, LST 1170)

Do you Know a Man Named Karl Marlantes?

That was the question my grandson, Emmett, texted from college.  I did not recognize the name.  He thought our paths might have crossed at some point.

His Wikipedia entry:  Karl Arthur Marlantes (born December 24, 1944) is an American author and Vietnam War veteran. He has written four books: Matterhorn: A Novel of the Vietnam War (2010), What It Is Like to Go to War (2011), Deep River (2019), and Cold Victory (2024).

This six minute Youtube video is a brief summary of his life as a Yale student, Rhodes Scholar and Marine Platoon leader, and his call of duty.  You would never suspect from his easy manner that he was awarded a Bronze Star, two Navy Commendation Medals for valor, two Purple Hearts, and 10 Air Medals.

The military draft caused generations of men to confront early in life, often as students, what duty means. Campus protests and military service are  two classic examples of how individuals answered what many knew instinctively-the call of duty.

A Moment to Decide One’s Duty

At some point in life we feel morally inclined or face circumstances where we have to pick a side.

We try to discern what we believe the right, the just and the good thing to do.  Informing this decision is the example of others-family, colleagues, and community leaders-from the numerous organizations that have shaped our lives to that moment.

What is our duty to others? All of us face this human summons at some point. Today a very small percentage of citizens will join the military. I believe Memorial Day should remind all Americans of the commitments we are asked to make in a democracy. Not just those who enter the military but those who fight for peace and justice in society.

Every person will be faced, at some moment in some arena, to answer their call “to pick a side.”  Memorial Day is a time to respect and honor all commitments, civilian, military and civic centered intended to help this country create a better life for all.


“Climbing Ladders to Nowhere”

A reader sent the following after reading Ed Callahan’s last interview as Chairman of NCUA. In that conversation he focused on the relationships between the agency and credit unions.

Hey Chip – I am just reading this.  My husband and I were camping in the wilds of Utah with very sketchy service.  In the “old days” it truly was a partnership with the Agency. 

Being a CEO my entire career, I was always highly engaged with the Examiners when they were in my credit union.  It was always a very positive relationship where we learned from each other.  Unfortunately, it devolved over the years into an “I GOTCHA” encounter. . .

Losing Our Heart and Soul

Greetings Chip!  I continue to read your blog . . .  After the latest news about more Illinois credit unions merging, I finally felt compelled to write down my thoughts on this issue.

I will publish his thoughts in the future.  These are his opening paragraphs:

Credit union mergers have been happening for decades.  Some are forced by the regulators, some are voluntary, and there are a multitude of legitimate reasons.  But as I celebrate 32 years in this industry, it is still sad to see the number of credit unions that disappear every single year, and to see the pace of mergers pick up every year.  When we lose our small credit unions, we are losing the heart and soul of our movement that makes credit unions special.  

I know that no matter the size, credit unions are still member-owned, not-for-profit financial institutions.  But it is difficult to argue with the fact that as we grow larger, whether organically or through mergers, that members have less of a voice. . .  And I fear that we are becoming just another industry, instead of a movement.

No Longer a Movement?

There is no doubt credit unions are becoming more and more “mainstream.”  They tout their promotions with professional sports franchises, stadium naming rights and multiple business partnerships.

Growth is the dominant success indicator.  Credit union lobbyists argue in tandem with banks against the consumer protection initiatives of the CFP.  NCUA’s Chair cites the FDIC as a financial model for the NCUSIF and positions his supervisory initiatives  because that is how banking regulators act.

In becoming an important component in America’s financial sector, have credit unions also embraced the status quo?  Are they more concerned with protecting their achievements than addressing the economic inequities members face in the economy?

An observer might give examples on both sides of the “movement” issue.  However, I believe credit unions are not alone in their constant temptation to be seen as fully engaged participants in the so-called “free market.”

“The Only Game in Town”

Franciscan scholar Richard Rohr describes the ever-present allure of America’s economic system this way:

Most of us have grown up with a capitalist worldview which makes a virtue and goal out of accumulation, consumption, and collecting. It has taught us to assume, quite falsely, that more is better.

It’s hard for us to recognize this unsustainable and unhappy trap because it’s the only game in town. When parents perform multiple duties all day and into the night, that’s the story line their children surely absorb. “I produce therefore I am” and “I consume therefore I am” might be today’s answers to Descartes’ “I think therefore I am.” . . .

The course we are on assures us of a predictable future of strained individualism, environmental destruction, severe competition as resources dwindle for a growing population, and perpetual war. Our culture ingrains in us the belief that there isn’t enough to go around, which determines most of our politics and spending. . .

F. Schumacher said years ago, “Small is beautiful,” and many other wise people have come to know that less stuff invariably leaves room for more soul. In fact, possessions and soul seem to operate in inverse proportion to one another. Only through simplicity can we find deep contentment instead of perpetually striving and living unsatisfied. . .

St. Francis knew that climbing ladders to nowhere would never make us happy nor create peace and justice on this earth. Too many have to stay at the bottom of the ladder so some can be at the top. . .


On Economic Forecasting and Future Predictions

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)


Two Important Data Trends & Saying Goodbye

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.

Questions: What do these two datapoints suggest about the future level of interest rates?
On February 15, 2024 the NCUSIF Investment committee bought a six year, three month $650 million bond yielding 4.26%.  Is NCUA repeating the same IRR mistakes that led to the Fund’s two plus years of current  under performance?

Learning to Say Goodbye

A final selection from He Gets Us campaign.  The use of stories to communicate values.

How Do Credit Unions 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.

Imagine Love

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.

Is It Art?

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.