Posts Tagged ‘NCUA’

Video tutorial: CU Marketing Budget Report

October 1, 2010

This video is quite a bit longer, 10 minutes, but it explains in depth the Credit Union Marketing Budget Report, how it works, and some of the many methods of peer comparisons it offers. These comparison pages include marketing budget, loan growth, share growth, PFI, Net Income, YTD Marketing Budget, and more. It enables you to compare your CU to your peers in your state, region, or nationwide. If you’ve never checked out the CU Marketing Budget Report, this video gives you an inside look!

Oh yes, and every page can be exported to Excel too.

And big props to EverythingCU member, (and EverythingCUJungle Fantasy Football League winner in 2005), Doug Ralston, VP of Hermantown FCU in Minnesota for being a great sport and long-time CU Marketing Budget Report user!

Credit Union acronyms still harsh my mellow

October 21, 2009

I was saddened to learn that Randolph Brooks FCU, a very large credit union in San Antonio, now calls itself RBFCU. Yet another excellent and distinctive credit union name falls by the wayside into a vast sea of sameness. This is the opposite of the differentiation and distinction goals that good business practice calls for.

Based on a previous blog post:

NCUA takes over US Central and Wescorp

March 20, 2009

BREAKING NEWS:

THE NCUA HAS JUST TAKEN CONSERVATORSHIP OF BOTH U.S. CENTRAL FCU AND WESCORP.

Initial reports are that the NCUA is going to fee regular credit unions another 10 basis points.

NCUA Press Release 3.20.09

Management at US Central and Wescorp will be replaced:
Wall Street Journal 3.20.09

Reuters story on it 3.20.09

WesCorp’s new CEO, Philip Perkins, says blah blah blah, business as usual, safe and sound, blah blah blah. This is not the Corporate you were looking for.

Oh, and also the NCUA will hold a webinar at 2pm Eastern time on Monday 3.23.09 about the take-overs of US Central and WesCorp.

Will Magnus- I love you man, but BZZZZTT!

March 20, 2009

Will Magnus is a comic book scientist, and the pseudonym for a very smart guy who is giving us an insider’s view of the mess at the Corporate Credit Unions.

His blogging has enlightened me in ways that an outsider otherwise would never know, including sharing with us a top-secret Letter of Understanding and Agreement that the NCUA foisted upon all but four of the Corporate Credit Unions.

In his latest missive, he’s given a very thoughtful response to how the Corporate Credit Union system should be reformed. There are many details in it that are way beyond of my circle of knowledge, so I have no comment on them. But I offer an even higher altitude suggestion for the reform of the corporate credit union system.

Will Magnus advocates for all Corporate Credit Unions to be abolished or phased out, and replaced by one single Corporate that will then be responsible for…. well, everything.

I love you Will, but WRONG WRONG WRONG.

Efficiency is a worthwhile pursuit. But efficiency above all else leads to disastrous results and unintended consequences.

How *should* the Corporate CU system be restructured?

I advocate a system modeled after one that has proven itself for more than two hundred years; and that’s our government. Yes, the government is not perfect and has its share of problems. But I am writing specifically about our three-branch system of checks and balances. The Executive, Judicial, and Congressional branches keep each other in check. The geometric shape which is the strongest is the one which contains the fewest sides, and that is the triangle. There is a reason why Schoolhouse Rock sang that “three is a magic number” a couple of decades ago, and the reason is as old as time.

A single Corporate Credit Union, no matter how well regulated and transparent, smacks of what America itself rebelled from, namely monarchical rule.

The current investment losses have to do with bad mortgage securities. We can write regulations to prevent that in the future. But that’s like removing your shoes to go through airport security- a knee-jerk response to trying to prevent the latest threat, when the next threat will be something else entirely, having nothing to do with airplanes OR shoes.

Creating a single Corporate Credit Union to maximize efficiency is the worst possible solution to this problem. The credit union movement flourishes because of its diversity. One of the problems with the Corporate Credit Union system is that there is only one “wholesale” credit union that all regional “retail” corporates invest in. The problem is that so much money, and therefore power, is invested in a single entity. There is truth in the old saw “absolute power corrupts absolutely”.

We ought to divide US Central into three relatively equal entities that compete yet cooperate with each other. Whatever form a re-engineered corporate credit union network takes, we need our Corporate Credit Unions to be based on the exact same cooperative principles that regular credit unions operate by. The seven cooperative principles should be etched in stone at the entrance to any corporate, league, office, or branch of credit unions of any type.

That’s my two cents on reform, feel free to share yours.

Can we bring transparency to CU governance?

February 23, 2009

I’ve been used to the idea that all credit union data is available to the general public, thanks to the Freedom of Information Act, ever since I discovered the existence of the complete financial data for all of the approximately eight thousand federally-insured credit unions in the United States back in the year 2000.

This is a wonderful thing. This means that ANYONE, a member, a concerned citizen, a person looking to join a credit union, a vendor looking to sell his/her services, can instantly get a picture of any credit union’s financial condition. This is important to democracy, and is compatible with the democratic principles that this nation, as well as the credit union movement, are founded on.

But what I am shocked to discover is that the “higher” levels of the credit union system are not run with this type of transparency. And am thinking about two current examples.

Lack of transparency from the NCUA: On Will Magnus’ amazing tell-all blog, he reprints the Letter of Understanding that the NCUA is requiring Corporate Credit Unions to sign in order to get/renew share insurance. I don’t pretend to fully understand the ramifications of the agreement, but I was saddened to learn that the agreement included a clause to keep the contents of the agreement itself a secret because to make it public, would be “contrary to the public interest.” Excuse me? Who decided that one? I am appalled. I can’t figure out what information it contains that someone did not want to be public knowledge. Thank you, Will Magnus, for giving us the transparency that the NCUA does not want us to have.

Equally, if not more, galling is that CUNA has not so far not published the results of their survey asking credit unions if they are for or against trying to obtain TARP-money. Christian Mullins has done an excellent analysis of this TARP-survey, concluding that CUNA is trying to sway CUs toward pursuing TARP money. If CUNA operated in the open, honest and transparent manner that the Obama administration is embracing, they would publish the results of the survey for all to see and analyze. However, they’ve also given little thought to the method of their survey. It’s an open and random web survey (now closed) that anyone could fill out. This is rife with potential for abuse. There is no way to verify that anyone responding to the survey is really from the credit union they say they are from. People can vote multiple times and stuff the ballot box. And what if more than one person from a CU responds? What if the CEO votes one way, and the board votes another way? What if the MSRs are split? What if management pressures staff to vote a certain way? What if some CUs encourage their staff to vote, and other CUs remain ignorant that the survey exists? This poll was poorly designed and executed. The results, no matter how they come out, are tainted and unscientific. Now, where did CUNA publish those results again?

Can someone please buy the NCUA a clue?

February 13, 2009

I have an excuse for not knowing much about the credit union movement for the first 8 or so years I was involved in working with it; I was never an employee of a credit union. I was just a vendor; and the credit union was just a client. I enjoyed working for the credit union because it was something I could believe in from a marketing point-of-view; I wasn’t schlepping potato chips or anything else that was bad for you. Credit unions really help people, and the more I got know these curious entities and the incredible people that worked within them, the more I grew to appreciate what a very special and marvelous movement it is.

That is why I remain stunned that so few people in the movement have a real understanding about what credit unions are or represent. Certainly, the folks at the NCUA don’t get it. Have we hired a bunch of laid-off bankers to fill the leadership roles there?

I will try to more calmly explain what has got me riled up.

Yesterday, the NCUA held a webinar to explain more about their recently announced Corporate Stab Program, and to answer questions from the attendees. More than 3500 people joined the call. The first 30 minutes was presentation from the NCUA, and the last 60 minutes were spent fielding a constant stream of excellent questions from the audience. I don’t blame the NCUA for the Corporate Stab Program; that’s a mess created primarily by US Central FCU. But a number of the NCUA’s answers yesterday rubbed me the wrong way, and I’ll address the grievances I caught from least important to most important.

First, can someone please buy the NCUA a technology clue? They said that an archived webinar would be available in two weeks. Are you SERIOUS? Anyone in on the call could have recorded it and made it available INSTANTLY or, at the very least, later that SAME DAY. Oh well, moving on…

At one point, one of the NCUA presenters (I forget who) talked about how important it was for credit unions to answer the request for comment on the APNR- about how to restructure the Corporate Credit Union System- because, after all, “you’re going to own it.”

GOING TO? REALLY? Did I hear that right? The credit union movement is “GOING TO” own the corporate credit union network? UMM, EXCUSE ME, the credit union movement ALREADY owns the corporate credit union system BECAUSE THEY CREATED IT in the first place! Perhaps it’s exactly this kind of us versus them mentality that led to problems in the first place? This notion that somehow the corporates, by virtue of their size, are somehow doing regular credit unions a favor by the nature of their existence instead of the other way around? Well, I can forgive this mis-statement as just “one of those things” that happens on a live call with the pressure of 3500 people listening, that he didn’t really mean to say, and would likely retract upon further reflection.

But the number one statement from the NCUA that concerned me was that they have “no position, one way or another” as to whether they should be pursuing TARP money from the federal government. That they don’t know how credit unions feel about it, because they’ve heard threatening statements (“we’ll leave the trade organizations”) from credit unions, on both sides of the issue.

First of all, the statement that the NCUA has no opinion in the matter is false, as evidenced by NCUA Chairman Michael Fryzel’s request for TARP funds dating back at least to November 2008, here, here, and here.

Second of all, the fact that the NCUA doesn’t have a handle on where credit unions stand is inexcusable. Ummmm, I think it’s been pretty clearly established that we live in the information age. It’s not like the pony express era when we had to wait weeks for the horses to ride across the rocky mountains and great plains states. At least they’ve set up (four months too late as Jeffry Pilcher points out) an online survey. (But they are not showing the results! Credit Union members deserve to know WHO is voting for WHAT! Christian Mullins analyzes this poll on his blog)

But most galling of all, is the inexcusable lack of understanding about what a credit union IS. (A credit union is a member-owned, cooperative, not-for-profit financial institution.) What really makes me sad is that whether or not to pursue taxpayer TARP money is being framed in terms of political EXPEDIENCY AND RAMIFICATION. Will it or won’t it affect credit union tax-exemption? Is it or is it not the least costly option to the bottom line?

What happened to principles?

Why is it that I had been working to serve the credit union movement for more than ten years before I ever heard of the seven cooperative principles that are part of all cooperatives, including credit unions? (And I heard about them from a Canadian, no less? Are they given merely lip-service in the U.S.?)

One of the principles that the credit union cooperative movement is founded on is AUTONOMY and INDEPENDENCE. During the height of the Great Depression, the credit union movement blossomed as part of the SOLUTION, not part of the PROBLEM. Why would we start being part of the problem now? Why is no one voicing the point that we should be distancing ourselves as far as possible from the TARP bailout money because it would be the WRONG THING TO DO ON PRINCIPLE?

Why is the credit union movement worth working in and fighting for? Is it for the lower pay that can be expected as compared to working for a bank? I dare say no. It’s because we have principles, principles that put PEOPLE BEFORE PROFIT. Principles that self-sufficiency and education are our goals and our purpose. If we take TARP money, or even ask for it as “backup”, we are violating our own principles and may as well close up shop anyway.

After all, as Jon Stewart of the Daily Show said a few weeks ago,

“If you don’t stick to your values when they’re being tested– [then] they’re not values, they’re hobbies!”

Can someone please get the NCUA some Credit Union Development Education (CUDE) training please, before it’s too late? (P.S. Why isn’t CUDE or equivalent training mandatory for the NCUA, Corporate Credit Unions, credit union management, and everyone else involved in the CU movement, most especially new credit union employees?)

It’s EXACTLY this bank-like “get the most money at all costs” thinking that got credit unions INTO this mess. We need to DROP that bank-like mentality in order to get out of it. Getting out of the TARP line is the correct next step to getting our own house back in order. Getting CUDE-type education to everyone at all levels involved with credit unions is the correct next step after that.

Blindsided by US Central and the NCUA

February 12, 2009

This entry is a foundational explanation as to what’s going on in credit union-land for those who are shocked (as I was) to the NCUA’s Corporate Stabilization Program announcement two weeks ago. If you are a veteran of the credit union (CU) movement, please ignore this basic information. (Disclaimer: I am sooooo not an accountant or economist, just a geek/nerd paying attention to the credit union movement.)

Most of us understand that credit unions accept deposits from their members, pool the money together, and then lend those funds to members. All credit unions in the U.S. were founded by their first members making initial deposits. When a credit union needs to expand their operations, such as building a branch, they seek to borrow the money to do so, rather than paying it out of the current operating budget. If a credit union can make more prudent loans than they have cash on hand for, they can also seek to borrow the funds to do so. If a CU has extra funds on hand, they can invest it to increase their return.

When a credit union borrows money, rather than be at the mercy of banks, which may or may not want to lend money to a credit union, credit unions themselves banded together, pooled their extra deposits together, to create a credit unions’ credit union, otherwise known as a Corporate credit union. In the old days, a Corporate CU served a single state. Well, at another point, the 50 or so Corporate credit unions thought to themselves, “gee, we could get an even better rate on our funds if we all pooled them together.” and thus was born U.S. Central FCU in Lenexa, Kansas. US Central is the Corporate Credit Unions’ corporate credit union, or in other words, a “wholesale” corporate credit union. US Central takes funds in from, and loans them out to, “retail” corporate credit unions.

At a later point in time, someone got the bright idea that with modern technology, we could deregulate corporate CUs; let them merge with each other and serve many states at once, thus cutting costs, gaining economies of scale, and gaining a few more basis points of ROI. After all, we can now move and transfer funds anywhere in the world with just a few clicks of a mouse, right? Better competition equals better return on investment, n’est pas?

Well, unfortunately, no one saw the other consequence of that competition; the downside to opening up all corporate credit unions to compete for deposits from all 8,000 credit unions in the United States. And that downside is the increased pressure to increase ROI, which led to riskier investments.

Ooops!

There’s no use in crying over spilt milk now, except to motivate us to figure out how this went so wrong, and to fix the corporate CU system. This system, that credit unions themselves created to help each other out, needs to go back to its original purpose, which is to be a help to regular credit unions, not to nearly drown us out of existence by making horrible investment mistakes (who wouldda thunk?). One person at US Central has already lost his job (The Asset/Liability Management executive), and I’m guessing more will follow. Some sort of change and overhaul is needed in the way this thing is working. And it’s the NCUA’s (National Credit Union Administration) job to oversee and regulate the credit union system.

We can emerge from this crisis stronger, and re-dedicated to our members, with even more safeguards on our corporate CU system. It is a fine day (even if difficult) for credit unions if we can take care of our own problem ourselves, and step OUT of line for TARP/taxpayer dollars. But we must overhaul our corporate system; otherwise we may find ourselves going down this awful path again someday.

As a first step to fixing this, I’d suggest greater transparency, and making corporate CU investments visible to at least the ENTIRE CU community, if not to the entire public at large.

If I’ve made any errors in this simplified explanation, please let me know.

As a side note: Not everyone was blindsided by the announcement of the NCUA Corporate Stab Program. An anonymous writer, taking the pen name Will Magnus, has been blogging about this for more than a year at Unrealized Losses. His blog is being read by many in the industry, including Jim Blaine, the President/CEO of SECU (NC), the second largest CU in the nation with $16 billion in assets. By watching his corporate investments carefully, he saw the writing on the wall, and started pulling his CU’s invested money out of the corporate CU system in 2007. One of Blaine’s comments on that blog is here.

The NCUA Corporate Stabilization Program

February 5, 2009

Here are links to discussion and resources about the NCUA Corporate Stabilization Program:

Resources from the NCUA itself and CUNA:

Webinars/teleconference about it:

Blogs about it:

If you are an employee of a CU, League, or Corporate, discussion here:

Credit union reaction/outrage:

News articles:

Here’s what Corporate Credit Unions are saying:

Please feel free to improve the wikipedia article I started on it:

Credit Union acronyms totally harsh my mellow

June 14, 2008

The seeds for this blog post were sown by Christopher Morris, based in Madison, Wisconsin, who tweeted that he was incredulous that not everyone knew about the difference between CUNA and CUNA Mutual.

For those of you not knee-deep in credit union world, you probably didn’t even know that these two organizations even existed. And by some chance you have heard of CUNA, you most definitely didn’t know that there are two distinct organizations with different buildings, purposes, and personnel, located in Madison. (The buildings are located about two feet from each other in the same corporate park, but they are separate buildings, and both very large.) CUNA is the national trade organization for credit unions in the United States, and its primary goal is to advance the credit union movement, primarily through political advocacy. CUNA Mutual, now CUNA Mutual Group, or CMG for short (as if that is less confusing), is an insurance company, which provides insurance to credit unions and credit union members nationwide.

With names like CUNA and CUNA Mutual, you can understand why people might not have realized these two organizations are distinct. It’s really a bummer that the term “credit union” is two words, because it means that virtually any names that derive from it are going to be lengthy long. (Lengthy long is much longer than ordinary long and even longer than very, very long.) Because these names end up being a mouthful, insiders tend to reduce them down to their initialisms or acronyms. (Here’s the difference between these two terms, which I had not realized until yesterday.)

Because there are SO many of these credit union organizations, one MUST NOT give in to the temptation to shorten them. ESPECIALLY NOT TO THE PUBLIC, who has no clue what you are talking about, and is therefore easily confused by them. See which of this jumble of alphabet soup you are familiar with:

CUNA – Credit Union National Association
CUSO – Credit Union Service Organization
CUES – Credit Union Executives’ Society
CULAC – Credit Union Legislative Action Committee
CURIA – Credit Union Regulatory Improvements Act
CUMIS – CUNA Mutual Insurance Society
CUMAA – Credit Union Membership Access Act
CUSC – Credit Union Service Centers
CCUE – Certified Credit Union Executive
CCACU – Combined Council of Automotive Credit Unions (presumably CACU is already taken, or too confusing with California Credit Unions?)
CUIAA – Credit Union Internal Auditors Association
CUSIP – Committee on Uniform Security Identification Procedures (Did we not already have enough acronyms with CU in them that we had to invent some more THAT DON’T EVEN STAND FOR CREDIT UNION? yeeeeesh.)
CLIC – CUIS Loan Insurance Components (CUIS is CUMIS minus Mutual?)
NCUA – National Credit Union Administration
NCUF – National Credit Union Foundation
NACUSO – National Association of Credit Union Service Organizationss
NASCUS -National Association of State Credit Union Supervisors
NACUSAC – National Association of Credit Union Supervisory & Auditing Committees
NACUC – National Association of Credit Union Chairmen
NCUIS – National Credit Union Income Services
NAFCU – National Association of Federal Credit Union
NCUSIF – National Credit Union Share Insurance Fund
NARCUP – National Association of Retired Credit Union People (I did NOT make that up!)
NASCCU – National Association of State Chartered Credit Unions
ITCUA – Information Technologies Credit Union Association
ACCU – Association of Corporate Credit Unions
ACUCE – America’s Credit Union Conference and Exposition
AACUL – American Association of Credit Union Leagues
ACUMA – American Credit Union Mortgage Association
OCCU – Office of Corporate Credit Unions
WOCCU – World Council of Credit Unions

Have your eyes glazed over yet? That’s not even getting into state credit union leagues, which nearly always use their initialisms to give us:
CCUL • NMCUA • NYSCUL (now CUANY) • GCUA • MDDCCUA • FCUL • ICUL • ICUS • KCUA • MNCUN and so forth

And all of this doesn’t even factor in that many, if not most, credit unions like to shorten their names as well. And in some cases, that has led to even more bizarre abbreviations such as DFCU Financial Credit Union (which if in turn were initialized would be DFCUFCU) and SOFCU Community Credit Union (which, if initialized would become SOFCUCCU). There are more than 8,000 credit unions in the United States. That’s 8,000 more abbreviations that use the letters C and U:

BECU • BCU • DCU • PSECU • UCU • USFCU • LCU • RCU • TFCU • VCU • KSFCU • TCCU • CCCU (there are 9!) • CCFCU • CCU (there are 14!) • ACU • AFCU • AHCU • BFCU • UMFCFCU and on and on and on and on and on…

By the way, you will never catch me referring to EverythingCU as ECU. Ever.

So while I adore you, Alphonse Desjardins, Edward Filene, Joseph Boivin, Monsignor Hevey, and the other founders of the movement, a curse on you for not figuring out a better name than “credit union” before it was too late to change it. But at least it’s better than Bank of the People, or else we’d be doomed with BOPs everywhere and in everything. And that’s much worse.

And thank you to TexasT for the Austin-hippy headline inspiration.

Something positive always comes out of conferences

March 4, 2008

Washington DC's ChinatownOkay, I will admit it. Adam Lueb and I are crashing CUNA GAC 2008. We are not invited. We are not official conference goers. We are not exhibitors. But we love our CU peeps so much we made the trek down just to hang with them. When you are a small company, such as we are, it is a risk to come all this way, take time out of two employees busy schedules, and pay for meals, transportation, lodging, etc. So is it worth it?

The answer is a resounding yes. I’ve found that nearly always something positive happens when you do any or all of the following: break your normal patterns, go visit your peeps, understand your customers’ world better, facilitate getting smart people together, make new connections, and/or reinforce existing connections.

Over on OpenSourceCU, some are questioning the ROI of attending a BarCampBank. I have no response to that, other than, if you can’t see the value in meeting smart, creative, passionate people who are willing to learn and share what they know about the leading edge of the industry, then you definitely should not attend.

Tonight, Adam and I hooked up with Robbie Wright of MaPS Credit Union in Salem, Oregon. Last July, Robbie invited me to attend BarCampBank Seattle just a few days before it was about to occur. By chance, I was in Spokane at the time consulting with a CU there, instead of at my usual home base in Western Massachusetts. I had never heard of a BarCamp nor BarCampBank, and after checking out the wiki page for it, didn’t want to rearrange my schedule to hop over to Seattle for the weekend rather than return home to my son whom I hadn’t seen in many days. While I love my son dearly, I am still kicking myself that I did not attend that first BarCampBank in the U.S. when I had the opportunity.

Returning to the present, at Adam’s suggestion, we headed over to Washington DC’s Chinatown for Tony Cheng’s Mongolian Barbecue earlier this evening. While enjoying the fabulous dinner, Adam and Rob got to talking tech stuff. It turns out that Rob faces the same challenge we do in wrangling the NCUA 5300 data on all 8000+ CUs in the U.S. into shape every quarter when it is published. Rob asked Adam if he would be interested if his CUSO developed a way by which we could import it in the blink of an eye, andweimmediatelyansweredYES. So now Rob has direct feedback of the usefulness of a potential product, and we now have a potential source for a process that sidetracks us from more relevant work for a significant amount of time each year. This conversation would not have occured had I not invited Adam to come to DC with me.

As an additional bonus, we discussed briefly the online switch kit that EverythingCU offers to make it easy for a member to switch their previous financial institution to the credit union, and realized that MaPS CU is not offering it to their members. Talking with Rob has reminded me who the person at his CU would be the one to evaluate the product, I’ve sent her an email about it.

This trip is already worth it, and we’ve only connected with one person so far and haven’t even gotten to the main event; the reason why we’re here, the TwittaBloggerSocial MeetUp.


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