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The Real Problem at Arrowhead Credit Union is Working With Common Purpose, Not Lack of Capital
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Aug. 9, 2010
This case will have a profound impact on NCUA's actions. At the very least, the agency (again) did not read the political winds very well and realize that closing a credit union representing African-Americans would cause a legal reaction. If the credit union prevails, NCUA will have to write formal policies regarding the conservatorship or closing of credit unions. If you noticed, I did not say amend the policies because I highly doubt the NCUA has formal policies, instead operating by the seat of their pants.
NCUA has been in a CYA mode since they got caught mishandling the corporates.
Dilemma for CU's is that the NCUA = government.
Government CYA's almost always win.
Chip et al: If I am correct, the nature and deails of this action by NCUA resemble very closely the Stocksdale S&L Complain(Illinois) filed either against the FDCI or OTS back during the S&L Crisis. If my memory is correct, the Federal Courts overturned the overly aggressive and unnecessary action by the Regulator and restored the S&L and its key shareholders. When we heard at the NAFCU conference that NCUA Board views "Troubled CU's" as all "3,4, + 5" rated cu's, one could see this coming; and this small cu won't be the last !
I agree this is a major event that is taking place. It makes one wonder whether all of the recent CU liquidations have been warranted. It will be very nteresting following how this plays out.
Good job Chip
Solutions in Finance Inc
What a shock....This is what happens when there are NO checks and balances in place....When the insurer is also the regulator, it lends to a conflict of interest and poor decisions are made. NCUA is now establishing a track record of either acting too slow, ie..the Corporate mess or over reacting....The actions and reactions of an organization are a reflection of the leadership.
A good question to ask is why has there a single very large $100K non-member deposit paying from 1.5% to 3.5% when the member deposits were only paying 1.%. Maybe the NCUA has been looking at other activities/practices?
Maybe it’s time that some credit unions, with legal direction, get together and produce a set of guidelines when it is permissible to take legal action against your regulator and/or NCUA. I agree with some of the previous comments that this CYI attitude of NCUA is getting old. It seems ironic that the ones that created one biggest financial disaster in credit union history are still in charge of regulating the very financial institutions they are driving into oblivion. A smart person once told me, “Don’t follow dumb with stupid”. Well “dumb” has already happen and here comes “stupid”!
As a long time CEO, I believe that the NCUA was asleep at the wheel regarding corporates and all of us that work hard to build a solid CU are the scapegoats. Talk about concentration risk and all other risks, the greatest risk we have is the NCUA.
Thanks for reporting on this. Not trying to get too inside NCUA's head, I think prior comments on NCUA's motivations are valid. This action by NCUA on KAPFCU reinforces the notion that credit unions need to stand up to any regulatory exam's questionable sitations and findings. When first presented, don't agree with any criticisms; take time to verify them and to consider alternatives to prescribed corrective action. Kick sand on the umpire's shoes if needed but not so much you get thrown out of the game. I believe if more CUs held examiners and examiner supervisors to account for their findings, the KAPFCU case may not have happened; it's not too late to stand our ground, state or Federal.
I work for a small credit union. We are well capitalized, over 20% and haven't gone in the "red" in our 37 year history until the NCUA write-down, which was their fault to begin with yet we all have to suffer. We feel that we are being mishandled by our NCUA regulator, as that person is trying to micro-manage us. In our case, we should be the least of their worries. But what can anyone do because there is no one to complain to until it gets too far, in this case the courts? Like everyone else, I won't be surprised if NCUA mishandled the situation. GO KAPFCU!
NCUA has been a rogue agency for at least three years now. For the most part, their unionized field staff are some of the most incompetent and unreasonable people in the business of regulation. The CAMEL codes are of almost no value, because they are almost completely subjective. If they mishandled the KAPFCU situation, I will not at all be surprised.
Someone needs oversight over the NCUA. There was no good reason for this action. The NCUA is going to destroy the credit union industry by trying to cover their lack of oversight on the corporates by now forcing marginal credit union out of business. We credit unions need to stop these actions.
CEO ILWU Credit Union
So many experts in the industry. They have all the answers to every problem even though they can't run their own shops. When times get tough these people come up with all the same excuses. It's the economy, people are not borrowing. Congress hurts us, its NCUA's fault. Look in the mirror. Maybe the person looking back does not carry their own load, does not always make the right decisions and could do a better job. If you have all the answers and can solve all the problems of credit unions and the world, then run for office, get elected or get on the NCUA board.
I have served on our credit union board for 27 years and until recently I believed that NCUA and state regulators have been reasonably fair in their suggestions for changes necessary to protect the members. I now believe that isn't their main concern, which I think is to protect the insurance fund. Where was the NCUA in protecting credit unions from the corporates? I'm not anti-government, but NCUA needs to be a part of a reasonable checks and balance system and not to act as a bully in working with credit unions. They have too much power.
In the words of Albert Einstein:
"The problems that exist in the world today cannot be solved by the level of thinking (and people) that created them."
The NCUA is blissfully ignorant of the fact that they will all be out of jobs when they succeed in destroying the CU industry in the name of insurance fund safety. As they say, "With friends like NCUA and our government, who needs enemies..."
I was working for a small credit union until July 27, 2010. Our NCUA Examiner created a non-NCUA document and when employees would not sign the document, she blocked the exit and informed employees that they could not leave until they sign her document. We have her on camera blocking the entrance. This examiner is pushing a merger and has created a hostuke work envirnoment because we are against the merger. We are trying to find an attorney today. I am glad that credit unions are beginning to standup to NCUA.
Why do we have an entitlement society now? Used to be an honest days work for an honest days pay. Nowadays, seems like no one wants to accept responsibility for their actions; ever notice that?
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