NCUA's 'Merit' Increases Have Many Asking Why

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Among the world's safest bets are that the upcoming congressional session will bring never-before-seen linkages of the words "creative" and "accounting" when it comes to "reducing the deficit," that more Americans will pay attention to the new judges on "American Idol" than they will to the aforementioned issue of far greater importance, and that no credit union executive will have used any of the previous Thanksgiving holiday to give thanks to NCUA.

Already fuming over the failures of corporate CUs and the resulting assessments and now in year two of wondering whether there will be a next year, credit union managers everywhere learned in the week leading up to Thanksgiving of NCUA's plans to say "Job well done, raises all around." If you missed the Credit Union Journal report, NCUA said it will increase spending by $24.5 million (12%) in 2011, with that number including increases of as much as 8% for some. Not bad, with inflation hovering around 1%, especially since the big boost in take-home pay comes on the heels of a $23-million budget increase at NCUA this year (13%).

The agency is defending the pay raises by saying it has no choice, that its contract with its examiner union sets merit pay increases for next year at 5%-with some getting 8% because their contract was negotiated by the National Treasury Employees Union and it calls for an additional 1% to 3% (it seems everyone misunderstood Treasury as a reference to the "Department of" when in fact it's actually a reference to "personal").

No sooner had the NCUA board made the announcement than the Letters to the Editor box at began filling up with comments (and in the process setting a new record for the qualifying statement, "I don't want this published, but..."). Credit union leaders doing back-flips if they can post 2010 ROA of one-third of those figures have every right to be angry, especially because the raises are defined as "merit" increases. "Merit" implies something earned or achieved, yet if CUs weren't already mystified over how having examiners on-site at big failures such as WesCorp and U.S. Central weren't enough, they've moved right into apoplectic territory with a new report that nine CU failures are the direct result of fraud, leading to even more losses at the insurance fund.

Given the opportunity, most CU leaders would rate NCUA's job of supervision as a CAMEL 5. One case, St. Paul's Croation FCU in Cleveland, represents an astounding $170-million in fraud, incredible given that assets were just $210 million at its peak. And for this, credit unions ask, there are "merit" increases?

Perhaps putting this best in perspective was NAFCU CEO Fred Becker, who noted that the recent Congressional Medal of Honor winner, who risked his life in Afghanistan as a soldier, will be getting a 1.9% raise in 2011.

I was at a dinner recently with a group of CEOs when talk turned to social media in general and Facebook in particular. Suffice it to say, the group's "demographic" didn't exactly skew to Gens X and Y.

I was asked my opinion of the "trend" at credit unions, and responded by noting there really isn't any trend, that track records are mixed at best, that the hype at this point far outpaces any ROI, and that many CEOs have given approval to social media strategies at their CUs in large part because they're afraid of not being "with it," as we mod hipsters like to say.

"Thank you!" one of the CEOs at the table exclaimed, looking almost releived. "I thought I was the only one."

I bring the conversation up because Forrester Research has recently released a report called "Social Media Marketing for Financial Services," based on its review of 24 institutions' Facebook pages. Noting that compliance demands have stymied some of what FIs have been doing in social media, the report found that of the 24 just three mentioned products and services, about a third talked of the economy or money, and that most talked instead about corporate responsibility projects or sports sponsorships.

The overall conclusion of the report on financial institution Facebook pages? None really "resonate with consumers," according to Forrester. In short, don't be too disappointed that more people aren't listing your page under their "likes."

I was speaking with another person who has done a fair amount of consulting in the area of social media, who said she believed credit unions should generally stay away from Facebook, as it's about "fun" and "banks"-this might shock you-are not viewed as "fun." The same holds true with Twitter.

This person also offered that if a credit union feels it must be on Facebook, that Gen X and Gen Y don't like to be referred to as "young adults," and don't want special microsites just for them, saying they want the same information anyone else can get about building a financial path.

Another tip: if you've got some young person in marketing eagerly posting announcements on your "wall," you'll likely be walled off, as you are now viewed as being annoying and your "fans" will opt to "hide" you messages.

Finally, this reminder: dn't abrvte whn u txt. U lk slly.

Speaking of social media, best conference session title must go to the Bank Administration Institute (BAI), which titled a breakout at its recent meeting in Las Vegas, "Social Media: BFF or TMI?"

Frank J. Diekmann can be reached at

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