Isn't it Ironic, Don't Ya Think?
Though the Alanis Morissette song was criticized for not actually providing examples of irony (ironic, huh?), this column does. Wandering the halls of NAFCU's annual conference at the luxurious Venetian in Las Vegas a couple of weeks ago I was struck by and began contemplating irony. Like …
… the fact that NAFCU held a successful event in Sin City, which promotes—nay feeds on—gambling. Certainly the large majority of the people are there to have a little fun on vacation and walk away knowing their pockets will be somewhat lighter. For others, the desperation for that big win takes over.
And here are more than 1,000 credit union volunteers and professionals, statutorily responsible for “promoting thrift among its members and creating a source of credit for provident or productive purposes,” supporting gambling and excess on the member's dime.
I don't blame NAFCU, or the CU Directors & CEOs Leadership Convention that will be hosting here again this week. Attendance is low if you hold a conference in an unknown city or one without a major entertainment draw. I do applaud the National Federation of Community Development Credit Unions for hosting its conference in Detroit earlier this year. Bringing revenue to the depressed city and its local businesses demonstrates credit unions’ mission. CO-OP held its conference in New Orleans, which is both in need of revenue but has a certain draw, too.
… NCUA Chairman Debbie Matz requested that the House Financial Services Committee not amend the Community Bank Mortgage Servicing Asset Capital Requirements Study Act of 2014 to include a study of appropriate risk weights in the risk-based capital rule. The NCUA oversees the credit unions but doesn't want to be overseen?
Certainly it would have delayed the rule. It would be more effective to do it right, based on data from a study that provides legitimacy to the rankings, rather than to shove a reg through that may not be appropriate. Additionally, the study would create parity with the bankers, which, beyond the substance of the reg, is why the risk-based capital rule is being applied to credit unions. At the same time, the NCUA is wary of holding a second comment period regarding the risk-based capital rule.
… Credit unions can make a seven-year loan at less than 2% APR on a moving vehicle that is underwater the minute it's driven off the lot, but NCUA has determined it is not appropriate to put funds in government-backed investments for that long of a term due to interest rate risk. Chairman Matz pointed out recently that many credit unions have unrealized losses in investments available-for-sale. Then why is the NCUA forcing credit unions to sell them off if the chairman acknowledging this? Again, ironically, the agency is pushing solid executives hard enough that those close enough to retirement to throw their arms up and say, “I can't do this anymore.” Credit unions are going to lose some strong leadership because if this and they may not have the next leaders ramped up as much as they should yet. How's that for sound business?
… Credit unions were very excited when Chairman Matz announced at NAFCU's conference that it would propose a rule eliminating the 5% fixed asset cap and waiver process. The NCUA is making a pretty big deal about it because the agency knows it will play favorably among credit unions and take the heat off the risk-based capital rule and interest rate risk issues. You may recall, however, that it was in October 2010 that the NCUA repealed the automatic waiver for RegFlex credit unions.
Why? A few months after the repeal, Chairman Matz wrote then-NAFCU President/CEO Fred Becker: “Our evidence shows that investing in higher levels of nonearning assets can materially affect a credit union's earnings ability and, therefore, its viability. Call report data show a higher percentage of earnings problems among credit unions with more than 5% of shares and retained earnings invested in fixed assets.” More recently, she has said these purchases have no impact on safety and soundness.
… Investment banks are earning big bucks advising companies to move their businesses’ home address overseas in order to avoid paying taxes. Yet the banks continue to attack credit unions’ tax status.
… CFPB Director Richard Cordray told a congressional subcommittee July 30 the bureau's performance review system is discriminatory. This is the agency that is supposed to ensure consumers are treated fairly, yet its own house is not in order.
Isn't it ironic?
Sarah Snell Cooke is publisher/editor in chief of CU Times. She can be reached at firstname.lastname@example.org.