Category: Uncategorized

Chansons Innocentes II 

by E. E. Cummings

hist     whist
little ghostthings
tip-toe
twinkle-toe

little twitchy
witches and tingling
goblins
hob-a-nob     hob-a-nob

little hoppy happy
toad in tweeds
tweeds
little itchy mousies

with scuttling
eyes     rustle and run     and
hidehidehide
whisk

whisk     look out for the old woman
with the wart on her nose
what she’ll do to yer
nobody knows

for she knows the devil     ooch
the devil     ouch
the devil
ach     the great

green
dancing
devil
devil

devil
devil
     wheeEEE

Note: The poem “celebrates country folk superstitions of All Hallow’s Eve or All Soul’s Day, when ‘witches and tingling / goblins,’ ‘little ghostthings,’ and other spirits of the dead make their appearance. The poem is written as a child feels in the midst of these ideas, stories, and legends of old age, death, and the supernatural; much of the diction is in child language. [. . .] [L]little creatures from another world are ‘scuttling,’ running, and hiding, creatures that are strange and fearful to a child, yet also described as childlike in character. [. . .]

Cummings never lets us feel too sad about death. The suggestion is that we should do as children do: feel old age and death in our midst for only a brief moment, and then go back to playing. Cummings reaffirms the joy of life that is always in process, and even imagines the spirits of the dead continuing this fun, the way a child might imagine it, for, after all, it is a green, innocent devil that is depicted dancing.”

Source:  R. A. Buck, professor of English at Eastern Illinois University published  in Spring: The Journal of the E. E. Cummings Society, no. 18 (October, 2011)

In a Disused Graveyard

by Robert Frost

The living come with grassy tread
To read the gravestones on the hill;
The graveyard draws the living still,
But never any more the dead.

The verses in it say and say:
“The ones who living come today
To read the stones and go away
Tomorrow dead will come to stay.”

So sure of death the marbles rhyme,
Yet can’t help marking all the time
How no one dead will seem to come.
What is it men are shrinking from?

It would be easy to be clever
And tell the stones: Men hate to die
And have stopped dying now forever.
I think they would believe the lie.

Note: Sandra L. Katz, professor emerita of English at the University of Hartford, writes, “The speaker decides to tell the stones that the reasons why the graveyard is ‘disused’ is that ‘Men hate to die / And have stopped dying now forever.’ The persona is playing a joke on the stone, but one that we—perhaps foolishly—wish were true.”

Memory can be the key to understanding events. It provides vital perspective for the present and context for future plans.

Last Friday  October  13^th was an important event in NCUA and credit union history from 13 years ago.

It was the anniversary of the payoff of the most recent loan made by the CLF.   It may in fact become the last loan the Facility ever extends.  Reviewing this event illustrates why this public-private cooperative partnership has failed to play any meaningful role since in the credit union system.

Here are excerpts from NCUA’s Media Advisory of October 13, 2010  with the headline:

NCUA Repays $10 Billion in Corporate Loans

Using proceeds from selling performing assets of two formerly conserved corporate credit unions, the NCUA yesterday repaid $10 billion plus interest to the Department of the Treasury.

NCUA raised the $10 billion by selling select assets from US Central and WesCorp . . .(including) securities backed by performing residential and commercial mortgages, credit card receivables, student loans and auto loans.

The proceeds allowed NCUA to repay a $10 billion loan from the Treasury to NCUA’s Central Liquidity Facility  which in 2009 transferred the $10 billion to the NCUSIF in order to lend $5 billion to each corporate. . . while they were in conservatorship.

Paying off the $10 billion in loans clears the balance sheets of both the CLF and the Share Insurance Fund,” said NCUA Charmain Debbie Matz.

The Significance of This Event

Since that October 13the payoff, the CLF has made no loans. Or even offered a lending initiative.

When putting US Central and four other corporates into liquidation in September, NCUA eliminated the joint plan that gave all credit unions access to the Facility.

The Agency had no backup proposal.   A brief history of this period and the Agency’s effort to mandate liquidity via regulation versus a shared cooperative option is described here.

The Current Liquidity Borrowings by Credit Unions

In the first six months of 2023 credit unions increased total borrowings by $75.6 billion to a total of $120.4 billion at June 30.   The two major sources for these funds were the FHLB system which increased loans by $46 billion and the Federal Reserve, a $29 billion lending expansion.

Even natural person credit unions increased deposits in other credit unions by $650 million via brokered non-member deposit programs.

The CLF with almost $900 million in capital and $20 billion in borrowing authority is missing in action.

This absence is not because no need exists or a shortage of resources.   Rather it is an inability to work cooperatively with credit unions.  The Federal Reserve announced  its new Bank Term Funding Program on March 12 or in days following the Silicon Valley bank failure.

NCUA does not lack statuary authority as suggested by board members to serve credit unions.    It lacks collaborative leadership.

The Lesson from the Last CLF Loan

But credit unions took an important  lesson from this CLF loan payoff. The  borrowing was designed by NCUA to provide for NCUSIF’s liquidity not the corporate credit union’s well being.   Immediately after the two corporates were in liquidation, NCUA  sold the best performing assets versus  using their earnings to  minimize losses to the fund.

The borrowings were to support NCUA’s regulatory priority, not to assist with a corporate’s liquidity management.

When put into  liquidation, three of the corporates reported positive capital including US Central, Southwest and United.  The CLF was paid off.   The Agency funded the subsequent liquidations of all  five corporates by going to Wall Street to issue  NCUA guaranteed notes to fund the ongoing asset recoveries.    These new borrowings were at rates many  times higher than the cost of short term deposits and the rate on CLF borrowings.

Credit unions saw that the CLF was not a resource for their use.  It  was only a  means for NCUA to manage the NCUSIF’s cash flows for its obligations to the insured corporates’ members.  CLF’s borrowings were not  for sustaining the corporates operations. In Matz’s characterization the loan payoffs: “clears the balance sheets of both the CLF and NCUSIF,” but at the expense of the corporate members.

Mandating Membership

In  a recent interview  before the NAFCU caucus Chair Harper reinforced this view that the  CLF is only an NCUA tool, not a shared responsibility. He said staff had been requested to review lowering the current $250 million asset threshold for credit unions required to have a federally backed liquidity source (the Federal Reserve or the CLF).  That is to force more credit unions by rule to join the CLF.

When given a choice, credit unions have overwhelming decided to belong to the Federal Reserve rather than the CLF, which has only 390 regular credit union members.  The CLF is seen as simply an arm of the regulator, not a resource for credit unions.

As outlined in an earlier analysis, credit unions no longer view the CLF as a reliable  partner in times of balance sheet stress

This 13^th anniversary of the last loan payment is another milestone.  It marks a year of no progress in making the CLF relevant for the credit union system.   Rather, it has just become another funding source for growing a bureaucracy with no obvious role.

Editor’s note:  Here is how one corporate recommended the CLF be changed in a 2011 comment on NCUA’s proposed liquidity regulation:

Alloya was among approximately 62 organizations commenting on the proposed regulation. The corporate’s comments centered around continuing the CLF, but making it closer in capital structure and operational nature to the Discount Window (immediate availability, little or no capital requirement), maintaining corporates as the agents for the CLF, allowing corporates to borrow from the CLF, CLF Board representation by credit unions and better investment returns on CLF stock through longer term investing.

The majority of credit union and corporate comments were similar and found value in continuing the CLF, but suggested that the structure (either capital or operational or both) be changed to preserve value. Another large portion of the comments were in reference to allowing the FHLB to act as a source of emergency liquidity.

None of these suggestions were adopted in the final rule or in CLF operations.

Most commentary on rates focuses on when will the Fed stop raising, pause and then lower rates.   And what will be the new normal?  Will the markets ever see another ZIRP, zero interest rate policy?   What ever happened to Modern Economic Theory that deficits don’t matter?

Here is a recent observation from Michael Higgins a consultant for banks and credit unions:

Since the inception of Fed Funds Rate in 1954, the average is 4.60% and median is 4.16%. Today it’s 5.33% (Source: St Louis FRED). The recent decade was a statistical outlier. If you entered the industry after iPhone was introduced, this is how things used to be. As one expert noted to me, it’s going to be “normal” for longer.

In August 2023 Apple reported its June quarter sales of $81.8 billion and profit of $19.88 billion.  It has a market capitalization of almost $3 trillion and a price earnings ratio over 31 times.  It is the world’s largest and most powerful consumer-focused tech company.

Why would a small midwestern credit union sue over the fees Apple takes when its members use the iPhone’s pay-on-contact solution?

Jim Dean is the CEO of the 14,000 member, $147 million Des, IA Affinity Credit Union. It was chartered in 1948 to serve the workers at the local Firestone tire factory.   The credit union’s main office and plant are still within sight of each other.  The credit union is the first plaintiff on the suit.

Dean is a lifelong credit union professional and believer. He states, “This is not frivolous.   There are many reasons to feel optimistic about the outcome.  Either a win or loss will have a significant financial impact.”

Affinity was the initial, lead litigant.  Last October the complaint was amended to add GreenState, IA  and Consumers Cooperative, ILL credit unions.   “When I searched for support, many CEO’s were unaware that this pricing situation and Apple Pay exclusive to iOs devices even exists.”

Dean continues: “I learned their apathy comes from a lack of transparency from the largest EFT processors. If we don’t see this growing expense defined at the contactless transaction level, how would we know?”

The Case in Summary

The 54-page Amended Complaint was filed in October 2022 in the United States District Court for the Northern District of California against Apple, Inc.

The central issue is that Apple refuses to allow competing mobile wallets from using the iPhone contactless payment system. This allows Apple to charge fees for a service that other tap-to-pay alternatives do not charge for.

The fee applies to banks, credit unions, and other payment card issuers for use of the tap-to-pay function on the Apple Pay app.

The cost is 15 basis points on each credit card transaction and a flat fee of 0.5 cents on debit card transactions. These fees come out of the fees that merchants pay to card issuers. Apple prohibits issuers from charging them back to their customers.

By contrast, when customers use similar tap-to-pay apps (such as Google Pay, Samsung Pay and a variety of bank sponsored apps) on Android mobile devices, issuers are not charged any fees at all. In 2019, Apple charged issuers $1 billion, and those fees are predicted to reach $4 billion in 2023.

The lawsuit contends that Apple can charge those fees because it improperly does not let other payment apps (again, such as Google Pay, Samsung Pay and a variety of bank sponsored apps) have access to the Near Field Communications chip, or “NFC chip”, on its mobile devices.  This prevents other payment apps from offering a tap-to-pay service on Apple devices that would compete with Apple Pay.

The suit alleges that this violates the antitrust law.   The credit unions are seeking both damages for their class and an injunction against future anti-competitive behavior.

The goal in addition to damages is to force Apple to change its policy of prohibiting other mobile wallets from having access to the NFC chip contained in its products.

Going Forward

Apple’s motion to dismiss is still pending.  If it proceeds, there would be discovery and the drawn out legal process.  In all probability the case will go on long after Dean retires.

Apple expects to sell more than 200 million more iPhones worldwide this year and is increasing its total market share versus its rivals.

Dean believes, “Most credit unions are up in arms about Durbin, part 2 ; but these  leaders are completely in the dark about this growing expense.”

This is why starting now matters: “We are doing this because some day, people are going to wake up and realize that we have a really serious, expensive problem on our collective hands. I’m not looking for headlines, but simply trying to change what will become a massive concern when people understand the gravity of this.”

But there is also Dean’s spirit of standing up for the common member.  “Big firms pick on the weak.  And can become economic bullies in the “free market.” That’s why we have coops.”

No, not me, but a kindred spirit.

Oscar Perry Abello  is the Senior Economic Justice Correspondent for Next City.  I have reprinted excerpts of his stories about startup credit unions and other community financial firms, especially CDFI’s. To find these just fill this blog’s search function with “Oscar Abello.”

In the following post he writes about withdrawing from his reporting job to write a book.

As you read his reasons, think about credit unions whenever he mentions “community banks” and their declining role in communities.  Ask whether cooperatives, in a similar manner,  are moving away from their core strengths?

His goal is to document the need for community focused financial institutions which he describes as “local fountains of money.”  Here is his “mission’ statement.

 

“The rumors are true.

“I’m going on book leave for the next few months. I’ll be working on a book, under contract with nonprofit publishing house Island Press, that makes a case to take back the banking system for communities. It will build on a lot of the reporting I’ve done right here for Next City’s newsletter The Bottom Line, especially over the past three years or so — quite an eventful period for the banking system, especially this year. . .

The Vital Issues or Just a Broken Record?

“Over the next few months, I’m looking forward to diving more deeply into questions like: What exactly is so different or special about a more locally-owned and locally-controlled banking system? What examples reveal how a renewed local banking system can avoid mistakes of the past and present? And what policy reforms or other changes help tilt the playing field back in favor of community banks or credit unions?

“As readers of this newsletter, you may recall one of the increasingly frequent occasions I’ve taken to mention in my reporting that there were 15,000 community banks holding 37% of banking industry assets in 1985, the year I was born.  Today there are just 4,200 community banks holding 11% of banking industry assets. If we’ve had the great fortune of sharing a conversation in person or during a webinar over these past few years, I’ve probably brought it up somehow. Sometimes I worry I’m starting to sound like a broken record about it. 

“I just haven’t been able to stop thinking about this set of facts — that there were so many community banks across this country within my own lifetime, and that we allowed so many of them to get swallowed up by bigger banks. A few years back, I came across this stunning graphic from the FDIC, showing how the four largest banks as of 2011 gobbled up a bunch of smaller banks over the decades leading up to that point.

“Maybe it’s a journalist thing. Follow the money, as they say. 

“Most of us, including most bankers, think of banking as taking deposits and lending them back out to borrowers. In some ways there is some truth to that idea, but it turns out if you follow the money all the way to its original source, 92% of money comes into existence as the result of a bank making a loan. So says a recent working paper co-authored by an economist at the Federal Reserve Bank of Philadelphia. Here’s the International Monetary Fund saying the same thing in 2016, the Bank of England in 2014, members of U.S. Congress in 1964, and economist Joseph Schumpeter (posthumously) in 1954.

Local “Fountains of Money”

“So think about it this way: In 1985, there were 15,000 money-creating local institutions. They were — and still are — often deeply flawed. Nearly all of them were guilty of redlining at some point in their history if not still at the time. Remember, women couldn’t open a bank account or get a loan without a husband or male relative’s signature until 1974. But even with those flaws, each community bank functioned as a local fountain of money. 

“Is today’s consolidated banking system an effective substitute for the 11,000 community banks that no longer exist? The Paycheck Protection Program debacle powerfully demonstrated the shortcomings of today’s banking system, as big banks initially struggled to reach the smaller businesses that were most urgently in need at the start of the pandemic. 

The Ongoing Need

“I don’t intend to wax too nostalgic about the community banks we’ve lost. Taking back the banking system must not look exactly as it did before. Lately there’s been another set of facts that grows larger and larger in my mind every day: Even after decades of consolidation, there are still 4,200 community banks out there. But how many community banks are also minority depository institutions, or MDIs, meaning they are owned or led by people of one or more racial minorities and primarily serve those communities? Just 122.

“Simply put, across the entire country there are 4,078 community banks serving primarily white communities, while just 122 community banks serve primarily communities of color. Of course, it’s much more likely today than it was in decades past for white-owned community banks to do business with people of color, but recent research has revealed the continued starkness of the divide.

“Banks still tend to locate their branches in neighborhoods whose residents look like their leadership or ownership, according to a joint analysisby researchers at Johns Hopkins University and the National Bankers Association, a national trade association for MDIs.

“Any effort to take back the banking system for communities has to take it back for the country we are becoming, not the country we were.

“So how many community banks do we need? I’m not sure that me or some policymaker or expert should be the one answering that question. Maybe it should be up to each community that feels ignored or frustrated with larger, distant financial institutions to take some of that money creation power for themselves and see how they do with it.

“I’ve been reporting on recent examples of communities taking that power for themselves. My hope is for this book to help the people in those and future examples to feel connected and properly informed about what’s at stake and why efforts like these are so important to the future of our cities, this country, and the planet. Look out for it in your local bookstore (tentatively) in Fall 2024.”

Oscar Perry Abello

 

A story from WEOKIE Credit Union’s CEO, used with permission:

“A critical aspect  of our vision is to “make a difference, one person at a time…by being our members’ most trusted financial partner.”

“But what exactly does that mean? During a recent visit to the Memorial Branch, the team shared a story that  exemplifies what that actually looks like.

“Mr. O, a long-time member of WEOKIE, is a frequent visitor to the Memorial branch, bringing donuts nearly every Friday. It’s clearly a nice gesture on his part, but it got me asking, “Why does he visit and bring donuts?”

“Turns out, for many years, he would drive his wife each Friday to get her hair and nails done and always brings treats for the staff. Unfortunately, his wife passed away, and he turned to Bella to assist him with managing all of the challenges of removing his wife from their financial accounts.

“Bella and the entire team took amazing care of him and continue to connect with him each time he visits the office. The void left from ending his weekly visits to the hair salon is now filled with smiles and connections with the Memorial Branch staff.

“When sharing the story  this month I  learned that many of our branches have been “adopted” by our long-time members because of the care and connections  to become their most trusted financial partner – and friend.

“A special shout out to Bella, the entire Memorial team, and every member of Team WEOKIE who is living our vision of making a difference, one person at a time. I am proud to serve with you!”

Bella and Mr. O:

Credit union stories remind us who we are and what we value.  Our shared history is sometimes best understood as a narrative strung together with anecdotes.

Joe Cugini (1930-2019) is one of the credit union community’s personal pillars on which we all stand today.  He was CEO of Westerly Community Credit union from 1959-2000.  In addition he  held leadership roles as President of the RI Credit Union League, Chair of CUNA, Presdent of the World Council and a member of the Federal Reserve’s Advisory Board.

His two-generation CEO tenure saw credit unions evolve from thousands of local startups to become the second largest depository system in the American financial marketplace.

Last week I called his wife Betty to see if there were any publications from his tenure as Chair of CUNA.  In that role he had introduced NCUA Chairman Ed Callahan at CUNA’s February GAC conference—were any records of that era left around, such as cassettes of GAC speeches?

The answer was no.  But she did share two stories that captured a time when credit unions were considered “family.”

A Dinner Before CUNA’s GAC

Betty was an active volunteer leader of the Girl Scouts of Rhode Island.  In that capacity she would attend the annual National Girl Scout Convention.  She believes the February 1982 meeting took place in Texas.

In the middle of the conference, she got a call from Joe, asking her to catch the next plane to Washington D.C. The event was an evening dinner with the new NCUA Chair Ed Callahan.  Wives were invited.  Sara Barr, wife of CUNA’s DC political affairs director Jim Barr, would meet her at the airport and take her directly to dinner-no time to change.

Betty arrived at the Iron Gate Restaurant, built within an old stable building in the heart of DC, in her Girl Scout leader’s uniform.  She only took off the sash with the scout badges.  She was seated next to Ed Callahan.

As they chatted, both learned they had been teachers–Betty in kindergarten, and Ed at  Boylan High School in Rockford, Illinois.  Ed remarked to Betty, “You welcomed them in and I said goodby to them.”

While sharing their  teaching careers, Ed related an event that occurred while principal at Boylan where his children attended. The shared concern among parents  was to make senior night a celebration that would avoid potential downsides-drinking, driving, out late after everything had closed and nowhere to go.

She said that Ed described how he approached the parents about this common worry and asked them to donate money to create a special “senior night out.”  From the donated funds he rented school buses to take all the seniors for the entire evening  to a local camp ground (it may have been a Y).  The location had food, basketball courts, a pool, and plenty of recreational options plus cabins for sleeping–just bring a sleeping bag.  Ed said all the kids were so tired by morning that  all they could do was go home and sleep.  Problems avoided-through a collaborative undertaking.

Joe’s Personal Legacy

As Betty told of her conversation with  Ed, she related one of Joe’s proudest initiatives.  During a post-Christmas holiday their children had exhausted all the local entertainment options (films, concerts, shopping for presents) and were looking for something to do the rest of the vacation.

In high school Joe had twice won the Rhode Island high school basketball championship.  As CEO of Westerly CU, he offered to sponsor a local Holiday Basketball Tournament to be a center of activity to fill this vacation activity gap.  Today the WCCU Holiday Tournament is ongoing.  Here is a current  description of the event:

This tournament was created in 1984 as a way to bring together local school communities in a competitive way to collaboratively raise funds for their sports boosters. This event has become and continues to be a community tradition. This year, WCCU welcomes back the teams from Chariho, South Kingstown, Stonington, and Westerly High Schools.

As the sole sponsor since its inception, Westerly Community Credit Union underwrites all expenses of the Holiday Basketball Tournament and as always, donates every dollar of the gate proceeds directly to the participating schools’ sports boosters. Last year each of the four participating schools received $2,000.00! To date, this tournament has raised over $258,577!

How important was this event in Joe’s mind?  The following is from his obituary: In lieu of flowers, donations in Joe’s memory may be made to the Joseph N. Cugini WCCU Holiday Basketball Tournament Fund c/o Westerly Community Credit Union – 122 Granite Street, Westerly, RI 0289.

The “Best” Lives On As  Stories Are Told

The dinner conversation and Holiday Basketball tournament are events which occurred four decades ago.  The tournament continues.   The details of Betty’s evening dialogue with Ed are recalled today, almost verbatim.

This story about Ed illustrates his special ability to create a “comfort zone” when meeting others.  Credit union events often had this feeling of “family get togethers.”

Betty and Sara still remember the evening today. As the lead actors leave the stage, these women’s stories remind us what we value in human character.

The  “best” in each of us continues through relationships.  Not just relationships dependent on professional roles, but the more special moments such as an evening meal with coop “family.”

The present does not exist without the past.   This is a factual statement.  However how we  encounter the past, will strongly influence who we are today.  And what we become tomorrow.

This year three of the world’s major religions have some of their holiest days overlap:  Passover, Ramadan, and Easter.

The events, liturgies, and services of all three are honoring past events that shape how their followers live and worship today.  This is more than remembering.  It is continuing a legacy of belief and ideals that are powerful influences still.

An individual example of this commitment is this short interview with Bono about how he practices his Christian faith.

Secular Practices

Organizations also honor their past.   Sporting teams retire star players jerseys or numbers to remind today’s competitors of past glories.

Organizations and universities name buildings, endow scholarships or professorships with the names of founders, donors and leaders who laid the foundations for today’s ongoing work.

Recently a credit union asked if I might speak at their annual meeting.  This is not something I have done recently so asked what he had in mind.

He sent me background on a keynote speaker.  It read:  Michelle Book, CEO of the Food Bank of Iowa, will be one of our keynote speakers this year. She is a friend. . .When Michelle took the helm of this Feeding America affiliate in 2016, it was on the brink of being decertified. Today FBOI serves 55 counties or over half of Iowa . . . Michelle will have an impactful message regarding changes our state legislature will pass into law this week which will result in .  . .another barrier for 300,000 food insecure Iowans to receive their SNAP benefits.  

Every event has embedded in it values, ideals and even prior grievances that motivate or guide its leaders.

Good Friday

Today is part of Easter Holy Week.  Good Friday worship is a time of somber remembering the crucifixion of Jesus.

The spiritual often sung in these services begins:  “Were you there when they crucified my Lord?”

The words are not meant literally.  Rather they evoke the power of worshipping or honoring those who came before to enable us to be who we are.

Religious beliefs are more consequential and longer lasting than most secular traditions, for some but certainly not all people.

However spiritual practice reminds everyone that indeed “you were there” when others created the foundations all stand on now.

And what we will pass on, each in their own way.