Odds and ends from the Reporter's Notebook Remnants Bin:
Credit unions often like to blow their own horns a bit when it comes to passing certain asset thresholds. But thanks to the creation of the Consumer Financial Protection Bureau (CFPB), there's one asset point milestone that can seem more like a millstone: $10 billion. That's where the CFPB's numerous rules and regulations kick in.
The newest to hit that mark is rapidly growing BECU in Tukwila, Wash. During CO-OP's recent THINK Conference, BECU's Scott Strand noted that it must now comply with the CFPB's caps on interchange. "We are going to get to see almost half of our interchange go away in 2013, which is tens of millions of dollars," noted Strand.
Speaking of THINK, I've heard my fair share of speakers over the years, but few of them were ever as interesting, entertaining, far-ranging, and at times over the heads of his audience as Jeff Baxter. To sum up, Baxter is the former founding member of Steely Dan and later guitarist with the Doobie Brothers who is now, as you would probably expect, an expert on missile defense. For more, see the May 7 issue.
Nix The Ozzy Osbourne Questions
First, Baxter joked that he wanted to make clear he would 1) not be answering any questions about Ozzy Osbourne, and 2), was glad to have been introduced so he wouldn't have to answer "Which Doobie you be?"
Baxter is more than well aware of his counter-culture roots in the very conservative culture defense establishment. He recalled that once, while wearing a Grateful Dead t-shirt and representing the defense department in contract negotiations, someone with a contractor asked a coworker, "Who is this guy? Does he work for Boeing?" To which the other person replied, "No, he used to be the guitar player for the Doobie Brothers."
Baxter, whom you could tell was one of those smart folks whose brain gets ahead of his mouth (and his audience), would often pause and come back to his point. He shared lessons in war gaming, including his own role representing Iran and Iraq against the U.S. (he called himself the "Ayatollah of Rock and Rolla"). Recognizing he couldn't win a conventional war, he claimed he did win by using Photoshop to disfigure all the faces of his opponents as if from chemical weapons, and then e-mailing the images to their wives. This infuriated one Marine colonel, who was ruled out of the game because he had lost control.
"Big banks move slowly," said Baxter. "It's like turning around an aircraft carrier in oatmeal. You can get inside the decision-making process of many of these folks. You're agile."
If you're either a baseball fan or a fan of Brad Pitt, you've likely seen the movie "Moneyball." The main character of a surprisingly good film about building the Oakland A's using a new model-statistics-is A's General Manager Billy Beane (played by Pitt), who also spoke to THINK.
Among Beane's many observations:
* "In 2002 I got a call and it was someone saying Michael Lewis of the New York Times wanted to to sit with us. I thought I'd give him 15 minutes. Michael sits down in my office and in three minutes he says, 'I know exactly what you are doing: you are arbitraging undervalued baseball assets.' As a good leader I like someone who validates what I am doing. And Michael kept coming around. After about two months we asked about the newspaper article. He said, 'Oh, I'm going to write a New York Times Magazine cover piece.' Then we ask what about the New York Times piece, and he says, 'Oh, I'm sorry, I'm writing a book.' After we read the galleys, we were mad, but we thought no one is going to read this."
* "We didn't make decisions in a vacuum. But some numbers don't mean anything. And whether you're a business or a baseball team, there's no reason to pay attention to them. We identified the biggest factor in success in baseball, and we went all in. We tried to sign players who just got on base; it didn't matter how they got there. The other skill sets-guys who can run and steal bases-the numbers told us it's irrelevant. We were overvaluing it and paying for it. When we started (on base percentage) was the seventh-highest-paid skill set; today it's the highest."
3% Success Rate
* "We draft 18- to 19-year-old kids. We have lots of misses. A first-round pick is $3 to $5 million, and a pitcher has about a 3% chance of making it to the majors. For us, we said, let's make this process objective. So we sought to do things objectively so we can look back on previous years and hopefully improve. Out of a 50-round draft with 30 teams, the average number of kids who made it the majors 15 years ago was two. We realized pure luck and randomness could get us two. So we started with a blank canvas and started to make decisions on the numbers. We looked at information back to 1965 and figured if we had the data and could get three out of 50, that would become a huge advantage over time."
* Among the draft practices the A's have put in place: drafting college kids over high school kids improves the chances of making it to the bigs, and this finding, which Beane called a nugget, "Not one position player in the last 10 years who was chosen in high school and who comes from a state with fewer than 18 electoral votes made it to the majors."
Frank J. Diekmann can be reached at fdiekmann@cujournal.com.
