PayThink

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Street "innovators," reckless community bankers, and irresponsible real estate speculators, among others-includes an outdated appraisal process for single-family residences that is in dire need of overhaul.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.

While cleaning out the Reporter's Notebook:

Compared with the depth of the damage, there has only been the slightest public acknowledgment from financial regulators that oversight during these past few years has been pathetically lax. During hearings on the downfall of AIG earlier this year, ousted Office of Thrift Supervision Acting Director Scott Polakoff conceded that the OTS could have done more to curb AIG´s risky behavior as a thrift holding company, and this was the clearest mea culpa yet. Officials from the Securities and Exchange Commission, an agency similarly put-upon after the Bernard Madoff scandal, have also acknowledged the formerly weak position of their organization and vowed strengthen it. But no agency has gone as far as the much-marginalized Commodity Futures Trading Commission in showing, rather than telling, a commitment to stronger oversight.

Federal regulators gathered today to announce a program to combat fraud in companies offering delinquent borrowers guaranteed loan modification help in exchange for up-front payments. That means regulators have figured out how to spot evil Hope Now impersonators, but they shouldn´t stop there. Some observers say borrowers seeking loan mods need even more protection.

This week in Washington will be quieter, and the District emptier, as Congress enters the first week of its Easter recess. But the silence won´t be total. Treasury Secretary Timothy Geithner is returning from London today, and some big names will convene at the Mandarin Oriental for the Council of Institutional Investors spring meeting.