One More Thing Not To Talk About At The Dinner Table

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OK, so apparently there is one more item you should add to the verboten list of things you shouldn’t bring up at dinner or among polite company. In addition to sex, politics and religion, add financial institution “examinations” and “examiners.”

On July 21, I used this space to urge new NCUA Chairman Michael Fryzel to use his fresh set of eyes to review the job the agency, its regional directors and its examination force has done in recent years given that so many credit unions are posting substantial losses, leading to red numbers at the NCUSIF and the shuttering of a half-dozen CUs (so far).

The column also made clear that Mr. Fryzel may very well conclude that the agency’s field force did all it could and that the problems besetting some credit union balance sheets were unavoidable and due to larger economic issues in the country.

Regardless of the conclusion, the important thing is that an objective review take place and that if changes need to be made, then get busy makin’. NCUA, after all, hosted a Risk Mitigation Summit last week in Chicago; perhaps it needs to begin at home.

That July 21 column led to more mail from readers than any other topic of the past two years, with the exception of the Frankie Awards in which feedback was invited. The response, almost all of it from credit union CEOs, was spirited, opinionated and vociferous in their views of what’s going on in the examination business. As you might guess, the views were nearly universally critical.

But here was the most interesting aspect of all the mail I got, and the one thing that ought to give Mr. Fryzel and all the state regulators pause for thought: nearly every e-mail concluded with some version of this sentiment–“this letter isn’t for publication–I don’t want a pack of regulators (one person actually said “pack”) breathing down our necks next week.” In short, there was an almost universal concern over regulatory retribution.

Among some of the not-to-be-attributed points made by readers:

- “I envy you for being able to call a spade a spade with the NCUA…I for one, being a CEO would not have the freedom to echo such a compelling message and critique of the insurer...”

- “In reality, what makes me more sad than mad is that there is a huge opportunity to use the enormous store of knowledge and information (NCUA has) to HELP credit unions do a better job and to be an actual benefit to the? movement, but instead they are satisfied with letting small credit unions be merged into oblivion while appearing to stand on the sidelines, but are? Actually pushing the process ahead with all their might...”

* Speaking of NCUA, during NAFCU’s recent annual meeting in San Diego NCUA General Counsel Robert Fenner was on hand as part of a panel discussion. With the view of some of the panelists hidden from folks on one side of the room by a podium, Fenner moved it and was immediately applauded. “Thirty-four years and finally I did something all of you approve of,” he joked. Fenner, incidentally, shared that he got his job and career at NCUA the way so many of us do, by happenstance. Just out of law school, a neighbor in his apartment complex told him a lawyer had quit at her employer, a federal credit union regulator, and urged him to come by. Since then, Fenner has worked for every administrator–beginning with General Nickerson–and board member at NCUA.

* How times have changed. During the recent Volunteer Leadership Institute in Hilton Head hosted by Paragon Consulting Group, a room of about 40 credit union directors was asked how many represented credit unions closely tied to a single sponsor. Just three hands were raised.

* Speaking of segues, er, raised hands, at a different conference in Florida recently, Mark Meyer of Filene Research Institute was leading a session at which the credit union soul was bared and some cynicism was on display. When talk turned to the “good old-fashioned annual meeting,” the question was asked, “Who shows up?” The answer from most: “Board, staff and some older members.”

Meyer then asked, “What percentage of your credit union’s board members know you’re a cooperative? And at the end of the day, do your members even care?” (Meyer and his fellow speaker were arguing that members do, in fact, care.)

When Meyer asked his audience for some differences between banks and credit unions, one person finally offered up, “Members get to elect boards.” That led to laughter, with just one person saying that at his CU more than 10% of the members vote.

Two things are sad about that last scenario. The first is that if you were to ask that same conference session how many of those credit unions provide “great service,” every hand would be raised. Then why aren’t those so wowed by the great service more active in the credit union? Second, plenty of research shows that members who are more engaged, i.e., they vote, are far more profitable to the credit union.

Finally, one more thing worth sharing” when Meyer asked how many know why 1934 is important to credit unions, just one hand was raised. If you don’t know, make a point to find out.

Frank J. Diekmann can be reached at fdiekmann 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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