BankThink

Perusing the trade press recently, I've concluded that I'm the only person in credit union land who thinks relaxing mark-to-market (MTM) accounting rules was a bad idea. But I have plenty of company in the international accounting and investing communities; the IASB, the AICPA and the CFA Institute (of which I'm a charter holder) adamantly opposed FASB's move.

There are certain words you never hear used together in the same sentence. "France" and "ideal call center location" is one example. "Bank" and "consumer benefit" is another. And then there are classics such as "economist" and "A-List party invitee."

Like all other financial institutions, credit unions are required by the Real Estate Settlement Procedure's Act (RESPA) to make complex organizational changes in 2010 related to the way revenue is disclosed to borrowers. At first glance, this may seem like a fairly simple adjustment, however, if not handled properly it could cause a painful transition that impacts the quality of member service.

I recently had dinner with a former credit union executive who is one of the sharpest people I've ever worked with. Gina Maria Sacripanti spent 16 years in CU management. Two years ago she graduated magna cum laude from George Washington University's highly ranked MBA program. She then left her post as COO of FDIC FCU to become director of business development & marketing for the Washington Examiner.

That was the idea evoked by Jamie Dimon, chief executive of JPMorgan Chase, this morning on an earnings conference call with reporters, when he discussed the Troubled Asset Relief Program funds his bank received, saying, "Folks, it has become a scarlet letter."

In the swarm of ideas for how to stop the financial meltdown, there´s one from a small company in California that seems to have gotten lost in the mix-a tragedy for the country, according to its creator. Though there are obvious barriers to the scheme´s success, it´s worth asking whether Ralph Liu´s SwapRent product, reviewed in a report by the Aite Group this month on new financial products, could really stop home price depreciation.

Among the handful of primary culprits for the current credit crisis-which includes Alan Greenspan's Fed, Wall Street "innovators," reckless community bankers, and irresponsible real estate speculators, among others-includes an outdated appraisal process for single-family residences that is in dire need of overhaul.

The comments from Amherst Securities and other securities dealers (in the article titled "Analysts See Fallout On Image, Systemic Risk," March 30, CU Journal) are self serving. The credit union system had far more investment problems when investments were handled by each credit union. Let's wait and see what the actual losses are at Wescorp and US Central. The write downs are based on undocumented impairments. We don't have audited financial statements from either Wescorp or US Central. We don't have Supervisory Committees or an independent Board of Directors. We have not had an annual meeting at which members can ask questions. All we have is the regulator's statement of impairment. We have been told we won't see the analysis that supports the estimate of impairment. I have no doubt there is an impairment. None of us book our allowance without seeing the allowance. Yet we we are booking a huge write down without any documentation at all. How is that GAAP? How is it reasonable to judge the corporate system without documentation? As a former CPA I say-show me the evidence.

With all due respect to Navy Federal Credit Union and the comments made by Mr. Dawson (Navy Fed Calls For Abolishment Of Corporate CU System, CU Journal Daily, April 3), I am the Treasurer of one of those "small" credit unions ($20 million in assets), and our corporate credit union is vital to our operations, providing many of our settlement, payment and liquidity functions as well as professional expertise in a wide variety of areas, services we depend on for our survival.

Editor's Note: This is the first in a series drawing from questions posed by credit union executives to members of Credit Union Retired Executives (CURE), a resource for free, confidential management advice and direction. The answers are supplied by former credit union leaders.