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Learning from History as We Debate the Past

Eighty years ago in August  1945  America exploded atomic bombs over Hiroshima and Nagaski. These actions propelled a quick end to the war with Japan.

President Truman’s  decision has been much debated since.  Some believe it was necessary; others disagree arguing that either a “demonstration” explosion or continuing the fight with an invasion of the Japanese homeland was the better next step.

As the topic will again be raised this week, I believe history provides an important perspective on this  decision. And insight as to how  we justify decisions now.

Two Post WW II Events

There were two WW II  related events that occurred when  while I was in the Navy on a ship homeported in Yokosuka, Japan.

The first was the return of the Okinawa islands to Japanese control via a treaty signed  in June 1971.  Return of this part of the Japanese territory was very emotional and deeply meaningful to the country.  Today Russia has failed to return the northern islands of Hokkaido they occupied at the war’s end.  It has left a deep emotional scar on the country’s  national pride.

The second was the surrender of the last Japanese soldier from WW II .   I remember the Japanese newspaper and TV accounts of this March 1974 event.  Here is  how the BBC described the event:

Lieutenant Onoda finally handed over his sword on March 9th 1974. He had held out in the Philippine jungle for 29 years. In interviews and writings after his return to Japan, Lt Onoda said he had been unable to accept that Japan had capitulated.

To many outsiders, Onoda looked like a fanatic. But in imperial Japan his actions were perfectly logical. Onoda had sworn never to surrender, to die for the emperor. He believed the rest of his countrymen, and women, would do the same.

Japan’s Internal Divide on WW II Surrender

Recognizing the Japanese strong allegiance to their homeland and their loyalty to the Emperor  exemplified by Lt. Onoda (who died in 2014), one can understand how difficult the decision to end the war was for Japan’s leaders.

The  internal political debate was intense. Whether Japan should accept  unconditional surrender or continue to fight is  reported in historian Martin  Gilbert’s book The Second World War.

At the very moment when the Nagasaki bomb exploded, the Japanese Supreme War Direction Council was meeting in Tokyo.  News of the bomb led to a renewed discussion as to whether Japan should accept unconditional surrender.  

The Council was evenly divided; three generals were for surrender, three for continuing the war.  The Foreign Minister, Shigenori Togo, cast his vote for surrender, as did the Prime Minister, Admiral Suzuki.  But the Minister of War, General Anami, was emphatic that there should be no surrender.  “It is far too early to say that the war is lost,” he told his colleagues, and he added:  “That we will inflict severe losses on the enemy when he invades Japan is certain, and is by no means impossible that we may be able to reverse the situation in our favour, pulling victory out of defeat.  Furthermore, our Army will not submit to demobilization.  And since they know they are not permitted to surrender, since they know that a fighting man who surrenders is liable to extremely heavy punishment, there is really no alternative for us but to continue the war.”  

The impasse was complete; but Togo and Suzuki were determined to end the war at once, and, in a secret meeting with Hirohito, prevailed upon him to summon a further meeting of the Supreme War Direction Council, and to preside over it himself.

The meeting took place shortly after midnight, in the Emperor’s underground bomb shelter.  First Suzuki read out the Potsdam Declaration.  Then, Togo urged its acceptance, provided that the position of the Emperor and the throne could be respected.  Suzuki supported Togo, General Anami opposed him.  For nearly two hours the discussion continued.  Then Hirohito spoke.  “Continuing the war,” he said, “can only result in the annihilation of the Japanese people and a prolongation of the suffering of all humanity.  It seems obvious that the nation is no longer able to wage war, and its ability to defend its own shores is doubtful.”

The time had come, Hirohito told the council, “to bear the unbearable”.  He therefore gave his sanction to Togo’s proposal that Japan should accept unconditional surrender.  The message to that effect, a formal acceptance of the Potsdam Declaration, was sent out from Tokyo, early on August 10, to the Japanese ambassadors in Switzerland and Sweden, for transmission to the Allies.

Is History Inevitable?

When an historical event is done, the outcome can seem almost inevitable.  In the use of the atomic bombs, there is an ongoing issue with the counter-factual argument that the US not have used the atomic weapons.

I believe the record of the internal political divisions and subsequent events such as the two above, suggest that this option was necessary.  That is not to dismiss the concerns about ever using atomic weapons again nor continue to learn from the aftermath.

I believe this event involved sober discussion and conflicting points of view by both the US and Japan’s leadership.  That is the point to remember today.  Few situations are without options, sometimes better ones, but not necessarily easier.

One of the most important questions any leader can ask in a crisis is what are my options? To describe choices by leaders as inevitable or dictated  by circumstance, takes away the agency and responsibility of those involved.   This is especially true when  the welfare of the whole is overridden by the self-interest of the few.

This acceptance of unalterable fate is a temptation the cooperative democratic system was designed to prevent.  But it hasn’t always worked that way.  Why?

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What Do Your Employees Have in Their Wallets?

Which employee benefits are most important  to retaining a stable,  experienced work force?  In the comment below, one CEO reports on his conversations with long-serving employees on their 5-year anniversary dates.

I would note there are many elements to creating a dedicated employee culture and team spirit.  But this benefit seemed to resonate in this credit union.

A CEO’s Analysis of the Importance of a Specific Benefit Plan

I often ask about what has motivated employees to stay with our credit union on their 5. 10. 15. and 20 year anniversaries.

Our 401(k) is usually at or near the top of their reasons. 

Data show we are exceeding the performance of similar-sized credit unions in nearly every measurement:

Contribution Rate: 19% – Percentage of annual salary between both employer and employee contributions.  Peer 12%

Participation Rate: 91% – Percentage of employees that are participating in the plan. Peer85%

On-Target for Income Replacement: 80% – Percentage of employees that are estimated to “replace” 80% of their income with their 401(k) investments. Peers 56%

Investment Mix. 87% – Percentage of employees that are invested at a risk level commensurate with their age | Peers 87%

These employees practice smart financial planning for tomorrow.  How does your retirement plan participation compare?

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Celebrating Credit Union Bikers Across Iowa in Summer

I have been told several stories by credit union employees of this summer midwestern Tour de Iowa.   Not to be confused with the Tour de France.   

It is often a family effort.  Here is a poem written by a 2025 participant which won Garrison Keillor’s July poetry contest.

Please add any comments about your experience if you have participated in this popular event.

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As Fed Meets Today, a Forecast for the US Economy

. . .Simply put, tariff and immigration policies threaten to both increase inflation and slow growth, a combination thatcomplicates the challenge facing the Federal Reserve. It will take several months to see how this plays out, but the tariff shock will soon be in the rear-view mirror and its inflation impact will fade towards the end of the year.

That should enable the Fed to focus more on the risks to growth and the job market, setting the stage for a series of rate cuts. The economy as well as the financial markets have been remarkably resilient so far despite policy induced heightened uncertainty. Once the tumult over tariffs is removed, the economic landscape should look much brighter.

Source:  August 20-25 Economic and Fancial Digest from Louisiana Corporate.

 

 

 

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Disrupting Credit Unions to Again Become a Movement

(Following are excerpts from exchanges between several CEO’s and a person, quoted below, interested in NCUA board openings)

Yesterday I was reminded about the fever of the small business entrepreneur to state their case in the wrong way that is,  the market capitalization (valuation)  of their firm.  

Their need is to be seen as an initiative or startup with the vision of selling the firm.  The goal of inflating the value not for the motivation of living the journey forward, but for being accepted by an audience handicapping their firm’s success and relevance to attract outside observers.

This is not a good look for cooperatives. Their “worth” was never meant as one ready to be traded, abandoned, or evaluated for observers who have no role building the firm.

The Market’s View

Once our industry started to be valued through the eyes of outsiders as a financial marketplace commodity, we were on the path to attracting all the trappings (inside and out) of those who think like commodity brokers.  These market driven criteria have a hard time with the ideals of community ownership (virtual) where acting and living the purpose is far different from cashing in.  

We sold out the magic of financial cooperatives not for the sake of being understood for our contribution and confidence in people acting together.  Rather the goal became putting a number on who we are.  Cash in, pay me, liquidation values, what was the other guy worth?  We strived to be evaluated and on par with ideals that are not the drivers of our member-owners’ success.

This transformation in outcomes is overseen by an out of touch NCUA and professional agents using criteria and motivation that will distort cooperative advantage for decades to come.

We need to hone the collective lens through which we set our vision for a new generation of leaders and oversight which will inspire cooperative entrepreneurs and the vesting and enthusiasm of American citizen owners.  

The Next Steps

  1. Call for the end of the NCUA – start a movement to highlight the fact that CU’s are not a government burden but an independent system wishing for autonomy.

1.a Separate the deposit insurance fund from government regulation and supervisory oversight.

  1. Take the newly separated cooperative insurance fund administration and refocus it on credit union success and nurturing innovation and leadership.

2 a.  Support a public initiative to prioritize league/trade organizational formats to return to advocacy and away from prostituting for commissions!

  1. Start a movement for cooperative entrepreneurial skills and measures that support CU differentials – in accounting, human resource., asset management, and network infrastructure and execution.  Surge collaborative business design initiatives.

Start something worth calling a MOVEMENT again.

On Mergers

  1. Reclassify merger into two transparent market types.

– rescues (with specific criteria)

– mergers for operational gain

  1. Announce a moratorium on mergers coming in 6 months.
  2. Publish an immediate effort for new rules in merger processes and due diligence by members and boards.  Announce new guidelines for explicit tactics around cooperative entrepreneurial ship, consumer-owner engagement goals, and programs for professional compensation over asset enrichment and gains.
  3. Moratorium in place for 12 months.  
  4. After 12 months – implement the new processes.

Your thoughts?  Ideas that certainly fit the times, not the status quo.

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Faces of a Community Honoring Their Members

When was the last time you saw an entire  community kneel in respect? Or prayer? Or love? Or shared grief?

There is little to add to this moment, but much to learn.

Relatives and community members react as they kneel before the funeral procession of 12 Ukrainian servicemembers and prisoners of war (POWs) who died in Russian captivity, during a ceremony in Lviv, Ukraine on July 25, 2025. (Yuriy Dyachyshyn/AFP via Getty Images)

Community is where we fulfill purpose and make our lives whole.

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Our Goal for Fulfillment and Society’s Need

This Frost poem below uses a realistic scene as a metaphor to portray the tension between individual ambition  and social need.

This challenge is at the core of excesses now very visible in the credit union system.

In academia, this is called the principal-agent problem.  When member owners delegate their tasks to an agent (the board of directors-CEO) but cannot directly monitor the agent’s actions, this leads to conflicts of interest.  At the extreme this turns into self-dealing as the agent pursues their own goals at the expense of the member-shareholder.

Frost’s presents his solution in the final stanza.  It feels at best an ambiguous rationale.

Two Tramps In Mud Time

by Robert Frost

Out of the mud two strangers came
And caught me splitting wood in the yard,
And one of them put me off my aim
By hailing cheerily "Hit them hard!"
I knew pretty well why he had dropped behindndhind
And let the other go on a way.
I knew pretty well what he had in mind:
He wanted to take my job for pay.

Good blocks of oak it was I split,
As large around as the chopping block;
And every piece I squarely hit
Fell splinterless as a cloven rock.
The blows that a life of self-control
Spares to strike for the common good,
That day, giving a loose my soul,
I spent on the unimportant wood. . .


The time when most I loved my task
The two must make me love it more
By coming with what they came to ask.
You'd think I never had felt before
The weight of an ax-head poised aloft,
The grip of earth on outspread feet,
The life of muscles rocking soft
And smooth and moist in vernal heat.

Out of the wood two hulking tramps
(From sleeping God knows where last night,
But not long since in the lumber camps).
They thought all chopping was theirs of righthtght.
Men of the woods and lumberjacks,
They judged me by their appropriate tool.
Except as a fellow handled an ax
They had no way of knowing a fool.

Nothing on either side was said.
They knew they had but to stay their stay

And all their logic would fill my head:
As that I had no right to play
With what was another man's work for gain.
My right might be love but theirs was need.
And where the two exist in twain
Theirs was the better right--agreed.

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.
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The Joys of Summer

Last week I attended a BigTrain summer college league baseball game.  The Bethesda entry is named after Walter Johnson the Washington Senator’s hall of fame pitcher who lived here.

The experience was fun.  We sat right behind home plate.  That meant every pitch had our attention.

The stands were on a human scale, parking 20 yards away and plentiful food with no lines.  It was a very different experience from the cavernous National’s Park with its crowds, parking challenges, and high prices.   We were able to just enjoy the game.  Until the end of the third inning when a summer rain storm arrived.

 When Baseball Was Fun

Growing up in Illinois, I became a Chicago Cubs fan.  My ambition was was to be a baseball player.  Then I learned in high school that I was no good as a hitter and a mediocre infielder.  But I still followed Ernie Banks, Hank Sauer and all the Cub legends on radio.

When I returned to Chicago in 1977 after a three year assignment as a banker for First Chicago in Australia, I went job hunting.  My first choice was to be the marketing manager for the Cubs.  I set up an interview.  I think the fact I worked at the largest bank in Illinois got their interest.

But before that event I had a conversation with two people who were reorganizing the Department of Financial Institutions (DFI) for the State of Illinois under new Governor Jim Thompson.  The two were Edgar Callahan and Bucky Sebastian.

As we explored what role might be appropriate, we talked about the job of Credit Union Supervisor.  It was a position that would use my analysis of corporate and  interbank  credit lines I had helped underwrite.

When Bucky and Ed asked what other options I was considering, I mentioned my Cub’s appointment.  Bucky jumped in and said if I took the job as Supervisor, he would guarantee tickets should the Cubs make the World Series.  At that time in early July the Cubs were in or near first place in the National League.  It seemed possible.

I took the job starting in August of 1977.  The Cubs did not get to the World Series for another three or four decades.  But Bucky followed through on his promise in a different way.

On the Playing Field

In the summer of 1978 he arranged for us to have lunch in the radio announcer’s press box and then go down to the field and take pictures with the players.

Here’s the record of that day when the Cubs faced the Phillies.  All the Cub’s games were during the day, starting time 1:15.  Attendance would be low, most people still working.  But the fans were right next to the action.  Just like at the Big Train game.  Pure fun with players, families and youngsters all being part of the major league scene.  Bucky was true to his word.

Bucky, Chip, Jose Carndinal of the Phillies and announcer Vince Loyd.

Chip, Loyd, Bill Buckner (First basman), Bucky

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A Comment on CEO Compensation

An observation on American business practice- I have lost the source.  Is the  issue relevant for credit unions?

During the past 30 to 40 years, the compensation of CEO’s has dramatically increased, relative to that of the average employee. Is the CEO’s proportionate contribution 100 or 1000 times greater than that of the average employee?

Many large American corporations are using distributive compensation process that reflect an employee’s relative power rather than an objective and ethical analysis of their relative contributions. Even Boards are unwilling to discuss this topic.

 

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An NCUA Board Agenda To Meet the Times?

When announcing the three agenda items for July’s solo board meeting, Chairman Hauptman closed with this affirmation: As always our mission is to protect the safety and soundness of the credit union system and we are best equipped to do this when we understand how credit unions interact with new technology and products.” 

While “new technology and products” may make interesting topics, the key to knowing if the agency is best equipped would be updates on the following issues:

  1. What is the status of the staff downsizing? The final number of departures?  Who fills the primary roles in the Chairman’s office and in agency critical responsibilities? What are the top priorities? What organizational changes have been made?
  2. What is the status of the examination cycle? How many credit unions will receive an annual exam?  How many will be deferred?  Exams are the primary tool that protects the safety and soundness of the system.
  3. Chairman Hauptmann expressed concern about increased credit risk. The first quarter data suggested improvement in most areas of financial performance. Can the E&I staff update the industry with specific trends or examples that the industry should be aware of?

This update would also be an opportunity to discuss the recent increase in liquidations including the abrupt closure of Unilever FCU on April 30.  Why is this occurring versus mergers or workouts?

  1. In the area of supervision policy, it would be helpful for updates from Regional Directors about their process for approving, or not approving, credit union purchases of banks. Several announcements of “definitive acquisition agreements” have been made by credit unions, only to have the initiative quietly dropped months later.  See Sabine Bank and TDECU’s announcement in June.  What are the criteria that credit unions must meet for purchase of a bank?

The Announced Agenda for Thursday’s Meeting

The NCUA’s three topics are briefings on the Central Liquidity Fund, NCUA’s Ombudsman, and artificial intelligence.  The first two would seem to be remote from any current issues.

The CLF has not made a loan since 2009.  In the liquidity challenges caused by the Fed rate runup in 2023-2024, all credit union borrowing went elsewhere.   The CLF continues to pay a below market rate to shareholders and to add to its retained earnings even though it has no risk.

The key to any future role is not a change by Congressional legislation (a repeated board excuse for inactivity) but rather the CLF’s willingness to work with its credit union shareholders on projects for member benefit.

As for the ombudsman briefing, I don’t recall this ever being a board agenda item.  Is this just to demonstrate an activity that DOGE missed?

Artificial Intelligence is a wide open topic.  Many credit unions are using bots for chat.  Some are using AI applications for internal edits and communication efficiency.  Several credit unions have announced investments in fintech AI initiatives.

It might be helpful to know how NCUA has used AI with specific cases and its effectiveness.  If the board topic is just a general presentation, that approach can be found at any credit union conference today by experts in the field.

The Role of Board Meetings

Public NCUA board meetings are an opportunity for accountability, agency management priorities and presenting a vision for how the agency and credit unions can work together.

It feels somewhat incongruous for a single chair, who is supposed to be overseeing the staff, to lead a dialogue to present different ways of thinking on topics that would arise from a full board.

In this time of government downsizing, unresolved NCUA Board status, and continuing economic uncertainty, a dialogue on the state of the Agency would be helpful and encouraging.

Will these topics meet that goal?  If the meeting falls short of this task, it might be helpful to ask credit unions about their issues for future meetings.

The Chairman recently took this approach on  crypto custody via  LinkedIn post.  It might be a way to stay relevant and supportive in NCUA’s mission of protecting credit union safety and soundness.