Lots Worth Noting For 2012, But It May Not Matter
As part of your 2012 Credit Union Checklist, just a helpful reminder to make sure you've got December 21st circled.
That's the day the world will be ending in a fiery, cataclysmic apocalypse, according to the Mayan Long Count Calendar. So if you're, say, planning a data processing conversion, you might want to put it off until Dec. 22, just in case. I mean, why go through the aggravation if you don't have to? And that holiday shopping? You have the option of putting it off, or really running up those credit card balances.
I've yet to see guidance from any of the federal or state regulators on the issue, but then again the Dodd-Frank legislation is more than 5,200 pages long, so it seems likely something about the Mayan doomsday prediction is buried in there somewhere (the Mayans likely still have an expensive K Street lobbying firm on retainer, like everyone else).
Management at credit unions and banks alike have been left shaking their collective heads at where the authors of Dodd-Frank came up with so many rules, so it's hard to rule out a Central American civilization that had its heyday about 1,500 years ago as a source of congressional inspiration.
There is one piece of good news. Sure, having just 11 months remaining before the world goes all hellfire and brimstone and really puts your disaster recovery plan to test is the sort of thing that can be distracting, but 2012 is also a leap year, meaning you'll be getting an extra day. So relax.
• As we look back on 2011's more notable events, there had to have been more than one credit union exec listening to the testimony before Congress by Jon Corzine about the missing funds at his company, MF Global, who found him or herself thinking, "Just once, I'd like to try that with my examiner."
In case you missed it, MF Global didn't come up short in its petty cash drawer; it can't account for $1.2 billion in client funds. That's larger than the asset size of all but the largest credit unions.
"I simply do not know where the money is," said Corzine to Congress. I was all but expecting an "And I double-pinky, cross-my-heart-and-hope-to-die swear," out of the CEO who is a former senator from and governor of New Jersey.
It makes one imagine the following conversation in a credit union boardroom:
Examiner: Umm, I've never seen anything like this, but it appears your entire auto loan portfolio is missing.
CEO: Yep, we thought you might bring that up. You see, it's a funny thing, we...
Examiner: It's not funny at all; it's $245 million!
CEO: I simply do not know where the money is. Uh, do you think we'll be here through lunch?
• A large number of credit unions have reported a large number of new members as the result of Bank Transfer Day. But BECU in Tukwila, Wash. is emerging in a class of its own. Perhaps it's fitting that what is at its core Boeing Employees CU is flying so high, as it reported adding 8,800 new members in August. Many credit unions would be thrilled with that kind of growth for an entire year. But it turns out that August was just the summer doldrums. BECU said it added 16,000 members in October and another 13,000 in November. At press time, it told Credit Union Journal its membership apps during December were up 170% over one year earlier.
If all of that were folks just plopping down deposits, the news, as anyone who understands a capital ratio knows, would not be so rosy. But BECU reported that during November its consumer loan applications were also up 74.8%. And that's the real "transfer" credit unions need to see.
• Speaking of that same issue, that deposits are actually a liability is little recognized out of financial institution management. There's no better example than the recent news reports that a number of cities (Portland, Seattle) and non-profit organizations have said that they plan to yank their deposits out of BofA and move the funds to a credit union. Most Holy Trinity Church in San Jose, Calif., for instance, recently said it was transferring $3 million in church funds to a CU.
Those types of announcements are typically framed in the media as "good news" for the little guy.
But what the little guy doesn't want to admit publicly is that "If you want to keep those funds over at the BofA, well, that's fine by us." Depending on the size of the credit union, three-million bucks can shave a point or two off the capital ratio, and give that examiner what's officially known as a frowny face. Of course, it probably doesn't compare to the look on the face of that church depositor when you're trying to push the check back at them across the counter.
• Heading into 2012, Credit Union Journal wants to thank the CU community for its extraordinary support during 2011. As many now recognize, the Journal has emerged as the No. 1 resource for growth-oriented credit unions, which we could not have done without all of your support. To the advertisers who have also made the Journal their No. 1 choice, we say thank you, as well.
As always, we welcome your input.
Frank J. Diekmann can be reached at firstname.lastname@example.org.