Funny Money.... The NCUSIF and The "OTR"

Noted recently that the NCUSIF audit (KPMG: dated 2-15-2012) reported a 50% reduction in the NCUSIF allowance for loan losses (ALLL) for the year ended 2011.  Reducing an allowance account by that tremendous amount would definitely raise alarm and concern out in "the real world".


Such substantial changes in the most important management estimate on a financial balance sheet, usually indicate a gross error in judgment or an effort by "management" to "gross up" earnings or capital balances.  Under any circumstances a 50% miss is pretty "gross"!

Everything's clean and shiny!

In this case the reduction in the NCUSIF ALLL was in the amount of $613 million; the reported NCUSIF "bottom-line" for the year was $620 million.  Let's see, without that ALLL recapture the 1.32% fund ratio would be... "magical accounting"?.... h-m-m-m.... 

Third Party Vendors .... Due Diligence.

Much ado has been made of late, within the credit union regulatory world, about the need for you to perform "due diligence reviews" of third party providers of services to your credit union.  Such advice, within reason, appears to be sound and finds little objection among the credit union community.  


Still, even sound regulatory "guidance" continues to be delivered in letters, findings, and DORs laced with strong traces of "arsenic intimidation" and lightly veiled threats of fiduciary irresponsibility for your slightest failure to conform.  Evidently "The Attitude" (despite the recent "Disney" training) remains entrenched: "We know you're a criminal; we just haven't caught you yet... but we will."  "Guilty until proven innocent" remains "best practices"  out in the regional provinces and along the banks of the Potomac.


In performing third party due diligence, it is quite logical to rank providers by the degree of risk they pose to your credit union. Clearly, attention and review should be focused first on those providers which have or may cause your credit union the greatest loss.

"And, now for the $15 billion answer..."

Q:  Which third party provider has caused your credit union the largest unexpected loss over the last five years?

Consumer Financial Protection Bureau....

CFPB - New Super Agency!

The Consumer Financial Protection Bureau (CFPB) descended on Durham, N.C. last week to hold  panel and open discussion sessions on "pre-paid cards", which appear to be one of the next major battlefields in the struggle over fairness in consumer finance.  


Pre-paid cards offer many new opportunities for credit unions to help members better manage their spending and payment transactions, without the penalty risks of NSF fees nor overdraft charges.  Pre-paid cards actually look like a product which can put consumers more fully in control of their finances, with better accountability and responsibility for their actions - a result which should be pleasing to one and all!  


Pre-paid cards may also be the perfect answer for bringing "the unbanked" back into the traditional financial services system, at a much lower cost to the consumer and as a new growth opportunity for credit unions.

Some very sly foxes!

But what I really wanted to mention was how knowledgeable, open, and inquisitive the "top brass" of the CFPB were.  Many of the Agency's leadership were there, including Richard Cordray and Raj Date. They truly understood the issues and obviously knew what they were about!  They even took time to listen to a group of consumer advocates from all across N.C., including credit union representatives.  Never seen such a tour-de-force by a regulatory group - insightful, "up to speed", engaged, definitely "first string players".  And, a truly open, honest dialogue... 

Memorial Day.....

THANK YOU!  THANK YOU!

Haiku For You...

All Knowing

Life does not exist

On the dark side of the Moon.

Why are you so sure?

Jay Birdegg.....

"You are the sunshine of my life,

That's why I'll always stay around."

- Stevie Wonder ("You are.... ", 1972)

From The Field...

Possible "unauthorized transaction":


"That charge on our card is not correct!  My husband couldn't have been at that gas station; he was supposed to be out of town that day..."


(Adding fuel to the fire?)

From The Field...

"We recently held a staff fundraiser to replenish the food cupboard at the hospital Family House.  Everyone was required to bring several non-perishable food items as a donation.  We ended up with an SUV full of "Let's Refill the Panty" canned goods...."


(Well, demand for food has always been "inelastic"...)

Cosmic Laughter....

The Dalai Lama walked into a pizza restaurant and asked....

"Can you make me one with everything?"

(Well, I thought it was funny...sorry!)

Robust Balderdashery.....

If you haven't as yet discovered '"The Economist" magazine, you might like to investigate this marvelous opportunity to meet and better understand the wider world - on a weekly basis.  Pair it with your hometown weekly newspaper... and there is little left you need to know about how the world works.....  


Couple of weeks back, "The E" ran a review of a new book by Leonard Mlodinow (must be from Wisconsin with a name like that!) called "Subliminal: How Your Unconscious Mind Rules Your Behavior."


Mlodinow, a theoretical physicist (I'm not quite sure what that is either), makes much in the book about how much of our lives are dominated by our subconscious mind; and that, "conscious reasoning makes up a comparatively small part of the activity in our brain."  If you think about it, that certainly makes a lot of sense.  Actually if you don't think about it, it makes even more sense.  So much of our daily lives are truly on "automatic pilot"....