I recently attended the NAFCU Chief Executive Officers Conference in Savannah, Ga., and the last speaker on the agenda was NCUA General Counsel Robert Fenner. Fenner quoted a statistic on the breakdown of CAMEL ratings among credit unions, which caught my attention. He said 5% of credit unions are rated 4 or 5, 15% are rated 3, and the majority-80% -are either a 1 or 2. Now don't shoot the messenger, but I find it hard to believe so many of us are that good.

One thing that amazes me about the CAMEL ratings is that being rated a 3 seems to now be the kiss of death. At one of the NCUA's corporate town hall meetings, Chairman Debbie Matz said special attention was being put on CAMEL 3 credit unions. If this was meant in the context of making sure they don't fall to 4 or 5, it makes sense. But if it means being a 3 is bad, that is a shift from past policy. Under Regulation 742, you can apply for the regflex designation if you receive a CAMEL 3 rating and are classified as well-capitalized. We need to have a clear understanding on this because, earlier, former NCUA Board Member Rodney Hood declared CAMEL dead. Yet, now it appears to have come back in zombie-like form.

Ever since the financial meltdown began in 2007, the credit union mantra has been, "we did not cause this problem." However, since the end of Glass-Steagall in 1999 let loose the dogs of free markets, credit unions have participated in the risk-taking run.