Category: Observations

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What Large Credit Unions Might Learn from Elephants

The largest, most powerful land animal is the elephant.  In many of their traditional habitats in Asia and Africa, their numbers are falling due to the loss of their traditional habitat and poachers.

The Elephant Whisperer is the story of a person who lived with elephants on a game preserve to try to preserve a “rogue” herd.

The author Lawrence Anthony devoted his life to animal conservation protecting the world’s endangered species. He was asked to accept a wild elephant herd on his Thula Thula game reserve in Zululand. His common sense told him to refuse, but he was the herd’s last chance of survival: they would be killed if he wouldn’t take them.

To win the herd’s trust, he had to convince the Matriarch  of the herd. The eldest female is the leader, until she relinquishes it. He slept in his Land Rover near them until they accepted him.

In the years that followed he became a part of their family. In creating a bond with the elephants, he came to realize that they had a great deal to teach him about life, loyalty, and freedom.

He learned elephants mourn their dead , and recall the time lapse of a year to the day of death to assemble round the remains.  When Lawrence Anthony died in 2012 , they gathered  to mourn him.

The Instincts of the Herd

Elephants care for newborns together.  When one is unable to stand up to nurse, they surround to help lift her up to the mother. Sometimes realizing the infant needed more nutrition, they would seek out Lawrence and his team.

The elephants thrive very much together, protecting and playing with each other but ferocious if threatened.  They will accept help from humans they trust.

An iconic picture of this group effort is when the herd will lie down to sleep for several hours each day.   As shown below the matriarch is at the top, the smaller, younger elephants protected by the older ones.   Most importantly, the picture shows how each member stays touched by another as they sleep.

 

Is there a lesson for cooperatives from this natural behavior of the world’s largest land animals?

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What is the “New Normal” Interest Rate Curve?

The recent Federal Reserve increase in short term rates to fight inflation, is seen by some to be a “temporary” increase.  At some point when relevant price indices have fallen into an acceptable range, the Fed will settle back to some lower initial reference point such as 1%.  Interest rates will then revert to the pattern of the decade of the 2010-2020 pre-covid era.

But what if that assumption is wrong?  What if the Fed’s definition of normal, a 2% real rate of interest on top of an assumed 2% long term growth rate, means the overnight baseline is closer to 4%?

Today the overnight rate is 3%.  The Fed is promising at least two, maybe three, more rate hikes this year? How would  a “new” 4% normal affect the rest of the curve?   What pricing and investment assumptions from the most recent decade would have to be rethought?

What If  Recent Past Rates Are Abnormal?

A commentator on MSNBC observed this past week, that interest rates have not been “market determined” since at least 2008.  He commented that the Fed policy of low overnight rates and quantitative easing created an artificially low interest rate curve to respond to economic crisis and to get the economy growing.   Some would move the starting point back to the post 9/11 era of lowered rates to avoid a recession following the attack on the World Trade Center.

Two analysis can help address this question of what the “normal” post Covid, inflation fighting yield curve might be like.

One is a May 4, 2022 article by Tony Yiu, which asked Why  was there Basically No Inflation in the 2010’s?  Here is part of his analysis.

Why did inflation not arrive earlier during say 2014? Or 2017? After all the Fed had been stimulating the economy and markets using easy monetary policy and QE since 2008. So why did inflation not spike until a few months ago?

So back to the question of where was all this inflation in the 2010s? My theory is that during most of the past decade, the stock market (both private and public), the real estate market, and new markets like crypto acted like a massive sponge that soaked up all the money that could have otherwise gone towards pushing up the prices of goods and services.

This created a positive feedback loop where:

  1. Stock prices and home prices go up incentivizing people to put more money in the stock and real estate markets.
  2. Money going into asset markets instead of chasing goods and services keeps inflation low (home prices are ironically not a part of CPI).
  3. Low inflation allows the Fed to keep interest rates low, which stimulates credit growth (along with rising collateral values).
  4. Credit growth causes even more stock and home price appreciation as significant amounts of the newly borrowed money gets plowed back into asset markets. And back to step 1 to repeat the cycle all over again.

Notice two things about this. First, this feedback loop results in the financial economy getting increasingly bigger than the real economy as money keeps getting sucked into well-performing assets like stocks and real estate.

And second, it’s not just low inflation and low interest rates that cause asset prices to go up. But because of feedback, there’s a causal effect in the other direction as well where increasing asset prices help soak up money keeping inflation low.

This positive loop obviously can’t go on forever. At some point, like the players in the casino, people will start to realize that there’s just not enough real stuff to go around (and not enough future earnings to justify the valuations). People seem to be finally realizing this based on the massive declines of stocks like Zoom and Netflix.

This realization kicks off a rush for the exits and a decline in asset prices. And because rising asset prices helped keep inflation low, the reversal into a negative feedback loop forces all that soaked up money to pour back into the real economy to chase goods and services, thus higher inflation (and higher interest rates).

Finally, a unique aspect of this current selloff is that where Treasury bonds are usually a place that investors can escape to during a market downturn, they’re part of the problem this time. Near zero nominal yields (and extremely negative real yields) mixed with high inflation makes Treasury bonds all risk and no reward (I first wrote about this here).

Long-Term Mortgage Market Rates

The decade of 2010 also saw the lowest 30-year mortgage rates ever, fueling a housing boom with double digit price appreciation.

Jim Duplessis of Credit Union Times published a September 26 article which examined the outlook as current mortgage rates hit a 20-year high.    His analysis with the relevant data link follows:

Rates in the 7% neighborhood might feel high for those who started buying houses in the last 10 years but they are on the low side for the past 50 years, based on Freddie Mac data published by the St. Louis Fed.

For more than half of the 2,687 weeks from April 1971 through Sept. 22, the rate was at least 7.4%. The median was 9.1% from 1971 to 1999 and 4.8% from 2000 to the present.

Rates peaked at 18.63% for the week ending Oct. 9, 1981 when the Fed under Chair Paul Volcker was battling inflation that had started during the Vietnam war. Volker’s aggressive rate hikes sent the nation into a recession, but knocked back inflation.

The lowest rates from 1971 to 1999 were 6.49% for the week ending Oct. 9, 1998, when the nation was in an economic boom. The lowest over the past 51 years was 2.65% for the week ending Jan. 7, 2021 at the peak of the refinance boom that vanished as rates rose this year to tame inflation.

A “New Normal”

Both analyses suggest the most recent two economic decades are an aberration in terms of a significantly lowered interest rate yield curve.

The efforts to reduce inflation will be a central part of where current rates end up.  But then what?

History suggests that the yield curve will shift to a higher level versus what many consumers, businesses and investors grew accustomed to since 2008.

There are other factors as well.   There is increasing evidence that lower rates while seemingly consumer friendly, do distort the allocation of economic gains disproportionately to higher income individuals while incentivizing multiple forms of financially driven wealth (speculative) strategies.

Anyone can predict the future.  No one knows it.   But believing that recent experience is the best or only guide to future rates, would appear a much too narrow perspective.

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 Karl Hoyle and His Powerful Cooperative Talent

Last week Karl Hoyle (1943-2021), a  credit union advocate, was interred in Arlington Cemetery.

There are 450,000 other graves, an honor earned, not bought.

The ceremony starts with a brief service in the Old Post Chapel.  The Honor Guard brings in the urn. The Chaplain reads the 23rd Psalm; the attendees say the Lord’s Prayer.  The organ plays America the Beautiful and On the Wings of Eagles.

Following the service the congregation goes with the honor guard to the gravesite.  The American flag is meticulously folded in a triangle.

There is the seven gun salute, the bugle playing taps and the sacred moment when the flag is presented to Kathy Hoyle, Karl’s wife, by an officer on bended knee.

Afterwards, roses are placed on the grave next to the urn where the only identifier on the wooden box is Karl’s military medals.

The Air Medal and Purple Heart

I learned during the reception that Karl had been awarded the Air Medal.  This  Medal recognizes military and civilian personnel for single acts of heroism while participating in aerial flight in actual combat.  It is the equivalent of the bronze star.

Karl was deployed to Vietnam as part of the 9th Infantry Division.   At the support base, a call came for helicopters to  medivac the wounded from a platoon still in the midst of battle.    He volunteered, got on the chopper and went straight into the firefight to evacuate his fellow soldiers.

As his military colleague stated: “Karl was the guy you wanted on your team.”

His life subsequently expanded to be much more than that moment of choice marked by courage and duty.

Joining the Cooperative Team

Jim Barr and Karl were the top lobbyists in CUNA’s Washington Office when Ed Callahan, Bucky Sebastian and I arrived at NCUA at the end of 1981.  Both had worked together in the late 70’s at the newly organized NAFCU.

Karl would sometimes remark that his profession’s reputation was not always the highest.  His favorite line was, “If you run into my mother, tell her I am just the piano player in a whorehouse.”

However when mentoring many others on the Hill, he counseled that :  “To be a professional with integrity, know that everything you say will be remembered.”

Three Personal Contacts

Of the many occasions Karl and I spoke, three stand out.

  1. Karl learned that I had moved to Bethesda, MD in 1982 to be near NIH because my wife was being treated for breast cancer. We hoped to get accepted in one of their special cancer studies, but had no idea how to begin. Karl offered to call and see what might be possible.  Shortly he informed us that because Mary Ann had already been on several chemo therapies, she was not eligible for their new protocols.  The studies were limited to patients with no previous treatments.
  2. In 1984 NCUA and the entire credit union system endeavored to find a Congressional bill in which to insert wording to redesign the NCUSIF in the Federal Credit Union Act. Democrat Bill Bradley was a key player on the Senate Banking Committee.  Karl was aware that Bill and I had played basketball together.

He brought me up to the Hill and sent a messenger into a banking hearing saying Chip Filson wanted to talk to the Senator.  Bill came out, motioned me into an elevator with him.  Lobbying Congress was not something I did for a living.  I don’t remember what was said, although I suspect Karl gave me the points to make.

Later that year Congress passed the Deficit Reduction Act, with bipartisan support, creating the NCUSIF’s new cooperative financial structure based on credit union’s 1% deposit perpetual underwriting.

  1. In May 1985, Ed, Bucky and I left NCUA to set up Callahan & Associates with a first office in the Triangle Towers building in Bethesda. Initial capital, $1,000. The location allowed me to be close to home, since I was a single parent with two teenage girls.

Shortly after, Karl called and asked if we needed any furniture.  CUNA was moving offices and had several old desks and chairs which we could have if we moved them ourselves.   We did.

He also asked if we needed any staff.  All three of us had worked in state or federal government for the past decade and were used to having support.  We said yes.   He said his wife Kathy, a superb office manager, was looking for a new opportunity.   She became Callahan’s first hire.

Karl’s Essential Cooperative Skill-Connecting

Karl’s special talent was facilitating the power that results from connecting people for common purpose.  Connections are what tie us together in community or when confronting personal circumstances.

Bucky said Karl’s success  was the result of his building relationships with  the staff in Congressional offices.

A former hill staffer at the reception knew Karl.  Her husband had been killed in the Air Florida crash in the winter of 1982 when the Potomac had frozen over.  She said Karl’s way of helping was: “Don’t call. Just show up.”

Tawana James, Karl’s deputy when he was Executive Director at NCUA, said “he cared about people.”

Credit unions’ competitive advantage is at its strongest when leaders collaborate.  Karl’s talent for connection came naturally, it was not an artifice.

Staying Connected

Two examples of his talent are in the pictures below.  One was a note to Bucky when Karl was in Madison at CUNA’s headquarters.  The second, a photo with the coach of the credit union team at the time, on which Karl was such a vital player.

Kathy like Karl has filled many roles  within the credit union system.  This year she will retire after working  more than a decade at InFirst Federal Credit Union.

Kathy and Karl: A relationship  bound by common purpose and service.

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People Say the Darndest Things

With an important agenda of public meetings including the  Federal Reserve, I think it is helpful to start the week with a little humor.

Quotes from a court reporter’s favorite testimonies.

ATTORNEY: She had three children , right?
WITNESS: Yes.
ATTORNEY: How many were boys?
WITNESS: None.
ATTORNEY: Were there any girls?
WITNESS: Your Honor, I think I need a different attorney. Can I get a new attorney?

************************

ATTORNEY: Is your appearance here this morning pursuant to a deposition notice which I sent to your attorney?
WITNESS: No, this is how I dress when I go to work.

***********************

ATTORNEY: ALL your responses MUST be oral, OK? What school did you go to?
WITNESS: Oral…

***********************

ATTORNEY: Now doctor, isn’t it true that when a person dies in his sleep, he doesn’t know about it until the next morning?
WITNESS: Did you actually pass the bar exam?

***************************

ATTORNEY: What is your date of birth?
WITNESS: July 18th.
ATTORNEY: What year?
WITNESS: Every year.

******************************

ATTORNEY: The youngest son, the 20-year-old, how old is he?
WITNESS: He’s 20, much like your IQ.

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A Valuable Case Study of a Ransomware Attack on a Credit Union

This morning’s news started with the report of a ransomware attack on the country’s second largest school system in Los Angeles.

The warnings or reports of cyber security threats occur daily.   However, until reading the article below I had not seen an actual account of responding when this happens in a credit union.

The case study appeared  in CUSO Magazine.  It was written by Matt Sawtell, VP of Managed Technology Sales at CU*Answers who had first-hand experience with the event.

Facts are given and lessons learned.  I would urge anyone in this area of responsibility to read this account.

The Anatomy of a Ransomware Incident (And What We Learned)

Following a trend that has been developing over the last ten years, cybersecurity is a topic that is no longer reserved for the dimly lit, garden-level, IT-dwelling teams to consider. It is a topic that is on the minds of those in the boardroom.

As events have garnered ever more concerning headlines, from the Colonial Pipeline incident, which was settled for around $5M in Bitcoin, to the various Microsoft incidents, to the cypto.com hack which saw thieves lift approximately $33M from over 500 user wallets back in January, it’s hard to imagine that no credit union has been affected by an incident in the last few years.

The target that financial institutions have on them is especially large. The attackers believe FIs have the dollars to pay and they possess sensitive member information, which has its own value and adds leverage to a potential payout.

In the last year, we have had the experience of participating in the response to one of these attacks on a credit union. The experience reaffirmed the importance of solid cybersecurity plans and operations as essential, and we gathered some takeaways for others as we worked through the event.

The event unfolds

Friday afternoon, nearly the close of business, our support team received a call from a credit union asking some questions about why their access to data on the network wasn’t working. We followed our normal troubleshooting and escalation protocols. Shortly after digging into this troubleshooting, the bad actor reached out to the credit union to say they had exfiltrated member information out of the credit union and communicated the ransom. Our team escalated this to management, who then advised the credit union to shut down systems and to contact their cybersecurity insurer to begin assisting with the incident.

Cybersecurity insurance is crucial

You have cybersecurity insurance, right? Believe it or not, we have run into organizations recently that do not. We view this as very important coverage, not just because of the financial aspects but also the incident response and forensic and legal resources these insurers can bring to bear in order to minimize the impact of an incident like this.

In this instance the response was swift—a forensic team and case manager were assigned from a firm that specializes in that work. They would quarterback the incident from here through the end. The lead had extensive experience working for a federal agency responding to just these kinds of incidents.

Be diligent, there is a pattern of timing with these events. If you look at the recent rash of events, it seems like the news often breaks on a Friday afternoon, weekend overnight, or before a major holiday. The bad guys know they may have a better go of it when we may have relaxed our guard a bit.

The mitigation work begins

From the initial contact Friday, the case manager was working with multiple parties and coordinating that work on daily (sometimes multiple) calls with all involved. The groups included the forensic team, legal team, negotiator, cybersecurity firm, our CUSO, and the credit union.

We were tasked with a few things at the start, such as determining if we had good backup copies offsite and getting the credit union an alternative way to do some of the daily processing and member work that was needed while the network was shut down. Thankfully, the online and mobile banking systems and audio response were unaffected by this outage so members could still do many of the transactions they needed.

The forensic team was digging in and looking for indicators of compromise (IOCs) as well as any information that might point to a known group of bad actors that pulled off the attack. They used tools, requested hard drives be pulled out of equipment and sent for inspection, and on a daily basis made progress in unraveling the who, when, and how details.

The negotiator was busy interacting with the bad actor and working to negotiate down the initial $5M ransom request. This if nothing else would buy time to decide what the options were over the coming days. The updates from this individual made the whole event seem like a spy movie as much as a cyber incident.

The cybersecurity company utilized tools to start monitoring behavior on the network, process and traffic analysis, and ingress and egress.

The credit union had closed itself to the membership for over a week following the start that Friday. They were present for every call and update, and ultimately made decisions on how all parties would proceed with the work they were doing. In the meantime, they also needed to figure out how to communicate with their members, regulators, law enforcement, and other stakeholders.

Do not overlook a communication strategy

Communication is key. When you have an incident, it is a stressful time. We have all witnessed companies that do a good job of communication and manage the incident well and we have also seen those who… leave room for improvement.

Take for instance the Colonial Pipeline incident. If you lived in the DC/Maryland/Virginia area during this incident, you witnessed panic fuel buying almost overnight. Communication between the pipeline company and the government was not forthcoming where it could have been to calm and inform the public.

On the other side of that are incidents like the Kaseya zero-day from 2021, where the CEO was out in front with regular updates, clients were informed and given IOCs before they were in the news, and the credit union provided transparency and clarity about what to do next.

As a financial institution, one thing to consider is having your incident response strategy and even sample messaging ready to go in advance. Have it cleared through your legal team, management team, and board; keep them in the know on the details and approach. Most importantly, understand that in some cases sharing too little, too much, or speculating publicly can do more harm than good.

You can take this a step further even by conducting tabletop exercises where your team will role-play out various scenarios in order to prepare. Finding someone with experience is a great way to guide the conversation and get the most out of one of these exercises.

Backups and the ensuing recovery

The forensic team started to make headway with their analysis. IOCs were found and pointed back to a foreign group that specialized in gaining access to business networks in the west. They could not tell when that original compromise had happened, but the method they used was sophisticated and had been found at other companies that had similar intrusions.

One of the most interesting things they found was that the state-sponsored group had likely sold access to the credit union network to another, likely an organized crime group that specialized in ransomware. This approach we are told is more common these days as the groups then specialize in their respective areas.

In the meantime, we had validated that offsite backups were not contaminated and could be used to help rebuild the credit union network. The cybersecurity firm had a standard process to create a new, separate, air-gapped network and slowly move machines from the dirty network to the clean one after they had been sanitized. This was painstaking work and took many days to complete. We worked very closely with them and at their direction to ensure the details were followed for each system.

While this was happening, the negotiator continued to haggle with the bad actors over the dollar amount requested. The bad actors had also given proof that they were able to exfiltrate member information, including an AIRES file, from the credit union and were prepared to sell that information on the dark web if their demands were not met. This is a newer tactic to add leverage in the hope of getting a payout.

The credit union was closed for this week while all tech was sanitized. Given they had good backups, and there was no guarantee the bad actors would return the exfiltrated member data, they decided not to pay the ransom, which at this point had been negotiated down to approximately $2.5M. The members who wanted to do in-branch transactions were starting to get frustrated, so re-opening as soon as was safely possible was the highest priority.

A more common and costly occurrence 

Ransomware events of several years ago were not nearly as sophisticated or as costly as they had become. Ransomware events were often slow to propagate the network, easy to detect if they had already been in the wild by traditional endpoint security software and the ransoms were in the tens of thousands, not millions of dollars.

The involvement of both states sponsored and organized criminal groups point to how effective a revenue generator this has become for groups that are sheltered in countries that either directly support or turn a blind eye to their activities. Think about the number of companies you have read about that publicly disclose this because they must…then think about the many multiples more that do not.

The end of an incident

Thankfully, this incident had as good an outcome as could be expected. The following week the credit union reopened its doors to members. The credit union retained most of their members, for whom they were providing credit monitoring for the next year. They opted to retain the cybersecurity firm to supplement their efforts after the incident concluded. The remediation and recovery was an effort that required over 1,000 hours of work from multiple teams. Our Network Security team had over 400 hours in the recovery alone.

What are the key takeaways for your institution?

  • Have a solid plan. It is best to prepare in advance and avoid trying to come up with a response in the stress of the moment. Prepare communications, understand and have contact information for the key players on your incident response team, and make sure everyone knows their roles and responsibilities.
  • Understand the technology and security you have. It is difficult to assess cybersecurity risks and gaps if you do not understand both what your team is doing, what your third parties and partners are doing, and what they are not doing. Make sure you have gone through a detailed assessment of this and that you are comfortable with the residual risk based on your approach.
  • Align with the right partners. Consider seeking out specialized partners for things like 24×7 monitoring through a security operations center or a managed detection and response service. Make sure your insurance coverage is appropriate for your organization.
  • Test, prepare, and practice. People are key in cybersecurity effectiveness and incident response. Make sure you’re training your team on the threats out there, how to use tech safely within the organization and to report suspected incidents as soon as possible. Conduct tabletop incident response scenarios to practice what an event might look like with your team.

 

 

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Eye Trouble

Since August 1, I have been visually impaired in my reading eye.   I have mono-vision so this means I cannot read, type or the normal close vision functions.

Had surgery last Wednesday which will take a couple of weeks to evaluate.

In meantime will produce limited, if any, posts.

Intend to get back in the saddle as soon as circumstances allow.

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Deification: The Eighth Wonder of the Cooperative World

(by Jim Blaine)

Must be the high season for letters of recommendation – those succinct summaries of superlatives for men and women of distinction.  This time around the injured party is Maurice Ravelle Smith. The pantheon of choice: The Cooperative Hall of Fame sponsored by the National Cooperative Business Association (NCBA) and its’ international arm, the Cooperative League of the USA (CLUSA).

For those not in the know, NCBA/CLUSA is the 106 year-old trade/advocacy organization for all forms of cooperatives – producer, consumer, worker, purchasing, service, and social cooperatives, including credit unions. At heart the members of NCBA/CLUSA are an eccentric, motley crew of die-hard idealists, with an organizational vision “to build a better world and a more inclusive economy”. Well, they certainly have their work cut out for them!

As you might imagine, NCBA/CLUSA does not accept any run-of-the-mill folks into the Cooperative Hall of Fame. Leaders of the usual sort need not apply, something more is expected – statesmanship, lasting achievement, cooperative advancement, distinct recognition. Exceptional leadership is the standard – the real thing.

“Deifying” the Movement

Maurice Smith is the real thing. While Mr. Smith’s service as CEO of Local Government Federal Credit Union – and in numerous leadership roles at CUNA, Co-op Bank and on the boards of his local university, hospital and church – is remarkable; what is exceptional about Mr. Smith is his success in “deifying” the credit union movement. The Bible has its “Ten Commandments” and until recently the credit union movement had its “Seven Cooperative Principles”. Now it has eight! The fault lies with Mr. Smith.

The eighth cooperative principle for credit unions is: “Diversity, Equity, and Inclusion” (DEI) – a disruptive idea fraught with complex challenges in a world stubbornly fractured by loyalties to clan, tribe, sect, nation, class, and heritage. Suspicion is often the norm. Is this an opportunity or a problem?  Fresh or “woke”?

The path forward, off-road, but on track, is awkward, tense, and uncertain – a tight wire perhaps, without safety net. Who in his right mind would lead us purposefully out over the abyss? Only a man of conscience, a noble and courageous leader, with a strong sense of justice. DEI will definitely challenge most of us, challenge us to cooperate, challenge us to change.

Tack and Tact

One sailing against the prevailing wind must tack, a leader fomenting change must have tact. Always courteous, considerate, and polite, Maurice Smith was able to achieve this revolutionary credit union change without uprising or revolt, because he is trusted by his peers and respected by all for his integrity.

Life is not the way it is supposed to be, it’s the way it is.  Just take a look around. The way you chose to deal with life and people makes all the difference.

It’s unfortunate   our best path forward at this time is DEI. Too bad we can’t simply honor and accept each other for who we are. But at least in the short run, DEI will force us to focus on our differences, in hopes that in the long run we will recognize we aren’t.

You have noticed that all those different colored M&M’s all taste the same, haven’t you?  Perhaps in the future, the eighth cooperative principle will become “dignity, equanimity and intelligence”, which are higher human standards and an apt description of Maurice Ravelle Smith!

Maurice Smith grew up in Southport, North Carolina. I have known him for over 40 years as a colleague and friend. He is a model of good manners. His mother – he still calls her daily! – and his father reared him to honor his roots and to always sow seeds for the future. The success of their lessons is apparent. Maurice Smith is an exceptional human being – the real thing.

Mr. Smith, through his DEI-fication of credit unions, has sowed the seeds for the continued success of our cooperative movement…let’s hope it is a bountiful crop!

And it will be, if you and I cooperate…

 

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Returning to the Office for Naked Fridays

(from Jim Blaine)

(“Last blush”… for an old favorite!)
 

Let’s go forward courageously; and forthrightly deal with the most important issue confronting the Credit Union Movement. No, it’s not taxation, the banks, CFPB, nor the NCUA. Our most pressing challenge is “dress down Fridays” or “business casual” if you prefer.

Business-casual – actually “business sloppy” is a good bit more descriptive – has become a fashionable idea in some credit union circles. Many progressive Boards and managers, who support the wind whichever way it blows, have adopted this new benchmark for professional attire. The “new look”fits well on the revisionists’  list of “new age” credit union principles – few, of which, are worth dying for.

Proponents assert that the new dress standards create a more relaxed work environment; make employees feel more comfortable; boost morale; and are strongly supported by the membership. Yeah, un-huh! I guess the best that can be said for this type of slender logic is that it’s only mildly “robust”!

It truly comes as a surprise to some of us that we are supposed to feel all “cozy and comfy” at work and should treat our duties in a relaxed, casual manner.

Maybe we have misunderstood all along the realities of the modern workplace.  We really must have things backwards!  False Assumption Number One must be the belief that “our” job actually belongs to the credit union – and its membership. False Assumption Number Two must be the belief that we are employed and paid to do what is necessary and required, not what’s convenient and comfortable. False Assumption Number Three must be that we are engaged in an extremely competitive, take no prisoners service business. And, False Assumption Number Four must be that our members expect, and are demanding, more from us – not less.

Old Fogey! Old Fogey! I can hear you crowing all the way from here! But, let’s compromise. If dressing down is truly good for the Credit Union Movement, let’s really go for it! Let’s take it to the limit with the ultimate Dress Down Day – Naked Fridays! It could work wonders with the membership! For example, Naked Fridays will definitely build member traffic; grousing about long lines will decline; and no one will ever again notice if a teller fails to smile.

This idea was broached recently with our staff.

Their reaction broke down into two distinct groups: those who were indignant and those who were very indignant! There were some surprises, however, among the actual responses. Older employees, figuring they had more to gain than lose, unanimously supported the proposal. Female employees were particularly difficult to convince. They did not object, in general, to the concept; but argued forcefully for a pay differential since they felt they added greater value. Equally disruptive, the female staff adamantly refused to pledge not to giggle around their male co-workers!

One previously ardent advocate for “business sloppy” became particularly incensed when she was asked how she would feel about coming to work on Fridays naked. It was an innocent enough question; but she became enraged; started yelling wildly; and pointed her finger decisively at me. I won’t tell you what she said, nor which finger she was pointing; let’s just say it wasn’t very pretty!“Communications” around the Credit Union were, at least, “really good” for a week or so…

Although a final decision has not been made, we probably will not go forward with the “Naked Friday” idea. There are just too many unresolved questions. Y’know the devil is always in the details. For example, would it be appropriate to ask or comment about a co-worker’s previously unrevealed tattoos?  Does failure to look a co-worker in the eye constitute sexual harassment? Should items dropped on the floor be picked up? It all just gets too complicated!  Besides, the Accounting Department started cautioning about higher heating and maternity leave costs. They’re always so drudgingly practical! The Internal Auditors did feel, interestingly, that the absence of pockets might help improve internal controls.

And, Marketing – bless their hearts – tried to stay upbeat with slogans such as: “We’ll give you the shirt off our backs” and“No Hidden Fees; No Hidden Costs; No Hidden Anything!”

We did have a couple of “King Solomons” who proposed several “simple solutions”. One was the “just blue jeans alternative”. But it was quickly killed, because most of us are of such an age that we are painfully aware of how we now look in blue jeans. We understand that we are the reason that overall denim sales have soared while the number of pairs sold has remained constant.

Another alternative suggested was organization-wide leisure suits (lime green, no less!), but fortunately clearer thinking prevailed.

Others called for “Theme Days”, when we would all dress alike around a common idea. This suggestion held much support until the wags began calling for Lady Gaga Mondays, Tacky Tuesdays, Dress-in-Drag Wednesdays, and No Bath, No Makeup Thursdays. And, lastly, for what it’s worth, I tried not to take it personally when that outraged employee, previously mentioned, called pointedly for “Idiot Days”.

Oh, well, who knows? Maybe we will eventually find an answer. Until that time, I guess we’ll continue to operate as though each of us truly needs our job; as though what each of us does is vital to the success of the Credit Union; as though being fashionably average is not good enough; as though Credit Unions are not a competitively protected class; and as though we’re here to raise the standard, not “lower the bar”.

As to employee morale, it seems you can’t pay those who work for money too little and you can’t pay those who work out of pride too much. Nor can you teach someone to care. Granted, it’s a lot harder to be something more, than to be something less; and life is never going to be comfortable when you’re trying to make a difference.

 

Old fashioned? You bet, ’cause “this ain’t no party, this ain’t no disco, this ain’t no foolin’ around…”

(originally published August 29,2016)
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Leonardo’s Horse: A Vision Outlasting Its Creator

Sometimes important, well-conceived ideas do not at first succeed. But if they truly inspire, sooner or later the vision will be fulfilled.

Leonardo da Vinci was a Renaissance master, a student of almost every area of knowledge being practiced. A painter, architect, designer of war machines, statues and inveterate keeper of notebooks recording every area his curiosity took him.

In 1482 he was commissioned to create a bronze horse statue by the Duke of Milan to be a gift to the Duke’s father, Francessco Sforza. The statue would be the largest ever cast requiring over 70 tons of bronze and standing 26 feet high.

Leonardo prepared by writing a treatise on horses’ movements, their anatomy and how he might balance a figure in motion, with just two of the four legs on the ground. In 1493 he made a full size clay stature of his design. He developed a unique engineering process recorded in his notes. The statue was to be cast in two halves and then joined together.

Full details of the sculpture.

Unfortunately, his patron gave the bronze collected for the sculpture to the Italian defenders of the city of Milan after it was attacked by an invading French army. The Italians lost, the clay model was used for archery practice by the French, and subsequently destroyed by weathering.

End of Story?

No, 500 years later a United Airlines pilot and art collector Charles C. Dent read about Leonardo’s vision in the September 1977 edition of National Geographic. He founded a non-profit to bring da Vinci’s vision to reality for his hometown of Allentown, PA. He died before the vision could be realized. His nephew took over the foundation and hired an experienced animal sculptor, Nina Akuma, to explore da Vinci’s drawings to create a fully realized instantiation. Two full size casts were made, one placed in Milan, Italy and the second commissioned by Frederik Meijer. (additional details)

It was this second horse I saw  on a visit to the Frederik Meijer Gardens and Sculpture Park in Grand Rapids, MI.

Although based on decades of Leonardo’s artistic work, it is today named the American Horse. The sight is truly majestic with the entire bronze weight supported by only the two opposite hooves. Its monumental standing is accentuated by the grass and tree sheltered green amphitheater which it alone inhabits.

The Promise of a Vision

Today the credit union vision is just over a century old. There have been almost 50,000 state and federal charters issued, of which 4,950 are still active. The challenge as in the artistic effort to recreate Leonardo’s horse, is what is core to the vision today? What is timeless in cooperative design  as it evolves in subsequent environments?

And is the design more than a single expression or does it require a “system” (as in Leonardo’s workshop) to support individual credit unions?

The commission that inspired Leonardo’s vision lasted long after its creator and sponsor left the scene. However the vision was so well conceived, that new artistic pioneers were motivated to fulfill the work, albeit in a contemporary context.

There is I believe a parallel with cooperative design. It is well conceived by founders, but requires contemporary architects  to ensure its relevance and sustainability for future generations.