A week after super storm Sandy slammed into the EastCoast, New Jersey Gov. Chris Christie looked ahead to preparationsfor a nor'easter that was due to dump snow and rain on the alreadyreeling Northeast.

“I'm waiting for the locusts and pestilence next,” saidChristie.

Luckily, the nor'easter downed some more trees but wasmilquetoast compared to Sandy.

• Year in Review: Super Storm Sandy Put Credit Unions to the Test
• Year in Review: After Obama Re-Election, Trades Focused on Lame DuckSession
• Year in Review: Examiners Moved Out From the Shadows
• Year in Review: TelesisTook a Belly Flop
• Year in Review: Credit Unions Grew Market Share
• Year in Review: VermontUncensored the 'B' Word
• Year in Review: Members Rejected Tech CU Bank Bid
• Year in Review: Mobile Mania Broke Out In a Big Way
• Year in Review: Reviews,Results Were Mixed
• Year in Review: Credit Unions Relished Used Cars
• Year in Review: Ala.Telco Aided Trucker
• Year in Review: HylandExited NCUA
• Year in Review: CookeNamed Publisher

Make no mistake about it, 2012 was a year of some welcomeindustry trends. About half of the nation's credit unions continued to add to members one year after Bank Transfer Day. Theindustry claimed an all time high in mortgage origination marketshare. The automobile industry posted a very strong sales year,and, with that, credit unions are poised to continue growingtheir  auto lending portfolios. And it seemed like everycredit union, even small ones, became convinced that mobile bankingis an essential member service.

But the year also witnessed calamities, missteps andstumbles–natural, financial, regulatory and self-inflicted.

Sandy blasted its way ashore on Oct. 29, wreaking devastationthrough the New York tri-state area and leaving millions ofhomeowners and businesses in the dark for days–some for weeks.

Early estimates said Sandy caused as much as $15 billion ininsured losses–possibly making the storm the third costliest inU.S. history. The governors of New Jersey and New York asked forclose to $80 billion in federal aid.

Of the 2,000 credit unions located in Sandy's path, 838 wereunable to operate, in varying degrees, during the difficult daysfollowing the super storm. And it took nearly a full week beforemost of those credit unions were be back in business to serve theirmembers.

Although New Jersey was the hardest hit state, there werewidespread power outages across New Jersey, New York, Connecticutand parts of eastern Pennsylvania. In the aftermath, mobile phoneservice was spotty and many roads were blocked because of massiveflooding, fires, downed trees and downed power lines. Up to 8.5million homes and business across the Northeast lost power.According to The New York Times, 93 people in thetri-state area lost their lives due to the storm.

For many days after Sandy struck, cash once again became king.Stores that were open were often running on their own generators.But with phone lines, cell towers and telecom networks out ofcommission, most could not accept credit or debit cards. Thesmartphone with the mobile app was just a three-ounce hunk ofplastic; less valuable than a bag of corn chips.

President Obama, who took a break from campaigning , traveled toNew Jersey to assess the damage, comfort victims and pledge federalaid. Gov. Christie was at his side during the entire trip andoffered effusive praise of the president and federal reliefefforts.

A week later, a major footnote to Obama's presidential legacymay have been achieved: the Jersey Boys Detente. Hitching a ridingaboard Air Force One, Bruce Springsteen was urged by the presidentto call Gov. Christie. He did and offered his friendship. Thisafter years of public and private snubs by The Boss.

The other disaster that bloomed in New Jersey was political. Anysad sack Democrat who had planned to run against the Republicangovernor next year was surely distraught.

Mandate? No Mandate?

Of course, this year everything turned political. SeveralRepublican leaders took issue with Gov. Christie for lauding thepresident. Some said it may have cost Mitt Romney the election.

Since the Obama coalition firmly held together on Nov. 6,delivering a solid 332 electoral vote victory, it is unlikely thatGov. Christie's hug had much of an impact. Romney ended up with 47%of the popular vote. (Forty-seven percent. Savor the irony.)

In the congressional races, CUNA and NAFCU, racked upnear-perfect records of throwing campaign support behind electionday winners.

In her victory speech on Nov. 6, Senator-elect Elizabeth Warren(D-Mass.) thanked a list of campaign supporters that includedcredit unions. She defeated incumbent Republican Sen. Scott Brown,receiving 54% of votes cast.

“Credit unions … yes … love my credit unions,” Warren said.

Dan Egan, president of the Massachusetts Credit Union League,said Warren was extremely gracious in mentioning credit unionsupport and said the league is looking forward to the opportunityto work with her. The league endorsed Warren, drawing criticismfrom some in the industry thanks to her association with theConsumer Financial Protection Bureau.

So where was the disaster? It was a disastrous end to Romney'sdecade-long dream to become president. It was a disaster forRepublicans' ambition to build a majority in the Senate. SheldonAdelson flushed away millions of his own money. And Karl Rovesquandered many millions of other people's money. Not to mentionthat primetime meltdown.

Before the election, credit union consultant Marvin Umholtzblasted the Massachusetts League's July endorsement of Warren forU.S. Senate. He said that nobody who supported the Dodd-Frank Actshould receive any credit union support.

After the election, Umholtz was not plagued by soberintrospection.

“The election of Elizabeth Warren to the U.S. Senate added tothe voting strength of the anti-business, bank-bashing left-mostwing of the Democratic Party. That does not bode well for creditunions, community banks or any other mainstream financial servicesprovider.”

He added, “At best, Sen.-elect Warren's dangerously misguidedregulatory interventionism will be a constant annoyance. And atworst she will play an instrumental role in the federalgovernment's stifling takeover of the financial servicesmarketplace.”

Whether Warren is a clear and present danger remains to be seen.But there are several dark clouds on the horizon for the republicin addition to the pending fiscal cliff. Donald Trump still has aTwitter account. And Rep. Michele Bachmann (R-Min.) wasre-elected.

Even before election night was over, pundits labeled it a“status-quo” election. But by early December, it seemed like thestatus quo had significantly shifted. A group of House tea partyRepublicans lost their committee assignments. Sen. Jim DeMint(R-S.C.) will soon leave the building. And House Speaker JohnBoehner (R-Ohio) publicly said he would consider raising tax rateson the affluent.

Telesis Crashes 

A calamity of the business lending kind befell Telesis CommunityCredit Union.

The NCUA announced on April 2 that it had contracted with the$1.3 billion Premier America Credit Union to manage the assets ofthe $318 million Telesis during Telesis's conservatorship. Bothcredit unions are based in Chatsworth, Calif.  The NCUAwas named conservator of Telesis after the California Department ofFinancial Institutions took over the credit union March 23.

The California regulator liquidated Telesis June 1 and appointedthe NCUA liquidating agent. Premier America purchased and assumedTelesis' members, deposits, core facilities and consumer loans. TheNCUA retained Telesis' CUSO shares.

For years, Telesis has been on the NCUA's list of troubledcredit unions because of large losses incurred on business loanparticipations extended outside of California to commercial realestate developments that wente sour. Member business lending CUSOBusiness Partners LLC, founded by Telesis, was sold to new creditunion owners in November.

NCUA Chairman Debbie Matz had said that while loanparticipations are a valuable tool for credit unions to diversifyloan portfolios, improve earnings and manage balance sheets, theydo have the potential to create systemic risk.

But that didn't stop her and the NCUA of offering a regulatoryproposal that would limit loan participations to a certainpercentage of a credit union's net worth.

In what some saw as a not-so-veiled slap at state regulators,the board said, “FISCUs have consistently reported higher rates ofdelinquencies and charge-offs on loan participations–which is onereason why the proposal would extend loan participation protectionsto federally insured state-chartered credit unions.” 

“This statement is disturbing,” wrote Credit UnionTimes Editor-in-Chief Sarah Snell Cooke. “It comes across asthe NCUA saying state regulators are not doing their jobs so theNCUA will do it. Following on the heels of North Carolina stateCAMEL disclosure and dual exams, I'm detecting a theme.”

And the state vs. federal theme played out again a few weekslater.

The NCUA floated a proposed rule that would require all CUSOs tofile financial reports directly with the agency. The regulator alsoproposed making additional parts of the CUSO rule applicable tofederally insured state-chartered credit unions.

In June, the NCUA board delayed the release of its final CUSOrule after questions of its legality arose. Guy Messick, partner atcredit union law firm Messick & Lauer, said the NCUA doesn'thave legal vendor authority to regulate credit union serviceorganizations. Others agreed and later in the year, the NCUA putthe proposed rule on the back burner.

It was a special moment, and doesn't speak well of the agency'sreg writers, when outside attorneys are the voice of prudentreason.

Charges from Ohio CU

This was not the only NCUA misstep in 2012. It stepped into onecow pie after the other throughout the year.

In a highly unusual move of going public, Commodore PerryFederal Credit Union of Oak Harbor, Ohio, told Credit UnionTimes in September that it had filed an exam appeal with theNCUA Supervisory Review Committee. The credit union alleged that anNCUA examiner harassed employees and retaliated against the creditunion after it complained.

The $32 million Commodore Perry FCU elevated its exam appealafter it was denied by Regional Director Herb Yolles in August.Thomas Renz, the credit union's president and chief developmentofficer, and CEO Mike Barr said the male examiner harassed andbullied employees, particularly female employees.

Credit Union Times identified the examiner as Roger A.Clark through information obtained from the NCUA.

Barr and Renz originally submitted an appeal to Yolles in June,stating that they had the documentation to prove the examiner'sfindings were inaccurate. They received a letter that denied theappeal.

So, on Sept. 9, Barr and Renz submitted a 365-page appeal to theSupervisory Review Committee that included documentation they saidproves the exam findings were inaccurate.

After an appeal hearing on Nov. 7, Renz, said he expected adecision from the NCUA's Supervisory Review Committee inDecember. 

On another front, the NCUA again stepped into a states' rightsimbroglio with both feet. The agency proposed a rule that wouldallow it to declare state-chartered federally insured credit unionsin “troubled condition.” That caused some state-chartered creditunions and their regulators to cry foul.

The rule, introduced at the NCUA's July 24 board meeting, woulddefine a state-chartered federally insured natural person orcorporate credit union as troubled if either the state or federalregulator assigns it a CAMEL or CRIS code of 4 or 5 in either thefinancial risk or risk management categories.

NASCUS President/CEO Mary Martha Fortney said her organizationwas very concerned about the preemptive nature of the proposedrule.

“Through successive preemptive rule making, NCUA continues todilute the dual chartering system with little regard for theconsequences and implications on the state credit union system.That NCUA proposes to further diminish the role of state agenciesin the supervision of FISCUs is troublesome from a broadperspective,” Fortney said.

NCUA Chairman Debbie Matz said, as stewards of the shareinsurance fund, the regulator needs increased supervision for anycredit unions it feels deserves a CAMEL 4 rating.

And once again the floated regulation was consigned to limbo asthe agency backed off and offered no move to advance it.

The stench lingered from the NCUA's insistence on separate stateand federal examinations of all North Carolina state-charteredcredit unions. Matz said the exams were prompted by the release ofstate CAMEL ratings by State Employees' Credit Union of Raleigh,N.C.

About a year after the CAMEL release, SECU CEO Jim Blaine andMatz met up face to face this September at the NASCUS Summit inDenver.  During the question and answer session, Blaineasked Matz why she was unwilling to meet with North Carolina leagueofficials and the state credit union regulator to iron out theissues.

Not only did Matz not answer the question, she also said, “I'mnot going to acknowledge your question with any comments or aresponse.” 

In late November, the NCUA experienced another Emily Litella“never mind” moment, this time on volunteer reportingrequirements. 

The NCUA scrapped a proposal that would require credit unions toreport the original appointment or election date of directors, amove that observers thought might create bad publicity for thosewith long-tenured board members. The agency said that during thepublic comment period, the NCUA realized the industry had concernsabout the necessity of the proposed change. And it promptly cleanedoff the bottom of its shoes.

In December, Tim Segerson, NCUA deputy director of examinationand insurance, said the agency's proposed rules on emergencyliquidity, CUSOs and loan participations were not likely to befinalized until late 2013, if at all next year.

Segerson said that the NCUA had slowed its rulemaking pace toensure rules are effective, and it has a full appreciation for thecost of implementation.

“We're going to move very slowly on our rules and if they arefinalized in 2013, I can't guarantee when, but I will tell you wehave a lot of homework to do before we will come out with finalrules on those,” he said.

Segerson also said he thinks many CFPB rules won't be finalizeduntil late 2013, with the exception of the final remittance rule,which he said is a few months out.

The CFPB has said it will delay until later in 2013 regulationson additional new mortgage disclosures, on a consumers' liabilityfor debt payment after foreclosure, and the creditor's policy foraccepting partial payment. 

The CFPB said it expects the proposed effective date of theremittance rule will be “sometime during the spring of 2013,”rather than the original Feb. 7, 2013 effective date.

The original rule, industry experts said, would cause manycredit unions to stop offering international remittances becausethe rule exempted from reporting requirements those shops thatfewer than  100 remittances a year. Industry executivesand trade groups have consistently said that number is far toofew.