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August 16, 2010
Wow, this is amazing. NCUA seems immune from accountability.
This does not surprise. We are a small, well capitalized, high rated cu. The last exam was a new experience in defensive strategy.
The denoument! It looks like the NCUA liquidated this one. Still don't understand why all the fuss for such a small credit union.
Thank you Chip for bringing clarity to this situation. Thank you Kappa Alphi Psi FCU for fighting for your credit union.
I don't understand why small credit unions are viewed so negatively by Regulators as well as some industry insiders these days. It's as though they do not see the value of small CU's anymore. Lucky for us, our membership does. I want to thank Chip for keeping this issue in the spotlight. The DFI and the NCUA have become downright abusive and there is no excuse for this type of behavior. If Kappa Alpha Psi FCU had a merger partner lined up there was no need for a liquidation. Why were they not allowed to merge? There needs to be some sort of appeals process.
When the law is on your side you usually prevail. I along with Mr. Filson am not a legal expert, but I doubt NCUA would proceed without thinking they are on solid legal ground. Everyone involved with credit unions knows that there are so many credit unions that have no idea what is going on and should be closed or merged. I am tired of having existing credit unions pay for the mistakes that have been allowed to go on for years. If you cannot do it right, move aside for those that can
This is not the first time, nor, I predict, will it be the last that NCUA defies logic and accountability for their actions.
Sounds like NCUA is acting like our current administration...doing whatever it likes and lacking common sense.
Another example of government without representation - doing what it wants to control the people...
NCUA failed to find the problems with so many large credit unions which inevidently cause the share insured funds to decline. Small credit unions are just a drop in the bucket to the fund. All credit unions should pay attention to what just happened.
Power with no accountability can affect us all. We should not forget...We bailed NCUA out, why can't they find better workout plans for it's members? Sounds like a bank in disguise. Take the money but don't give back. I wonder will there be in bonuses at the end of the year.HMMMMM
NCUA Examiners spend an average of 40 hours examining our low-income credit union and then act as if they've been managing it for 20 years and know what's best for the credit union when they write their report. They have no idea (and don't care to know) what the culture of the membership and community is, why some policies need to be "differet" and are referred to as "unsound" when they are clearly working; why "best practices" simply can't be best practices for our operation; etc. etc. They impose change that makes zero sense to management and members, and completely destroy the people helping people concept. Challenging is futile, they rule.
Anyone know of situations where regulators have been too patient and not put a credit union out of its misery as quick as it should? The focus should be on the members and share insurance fund that we all have to support if federally insured rather than unnecessary stuff, i.e., race, small v large credit union, etc. Are regulators given a pat on the back for being too patient and then eventually having to pull the plug; probably not but rather only the bad news is reported.
Economic times have been hard on financial institutions and many other businesses. Rather than the isolated liquidations where the issues are extreme, a focus should probably be on predatory mergers where larger ones try to pick off smaller ones.
Unfortunately, it is easy to take pot shots at the regulator without knowing all the facts. Also unfortunate that they cannot defend the agency publicly as they should and let the facts flow. If the stories could get out on what they probably experience at some credit unions, we would probably all be surprised!
This is more than unfortunate. I am baffled that they gave them till the 16th then pulled the rug from under the CU. It is certainly a travesty!
This is exactly why credit union CEO's have been silent in face of the atrocities being played out by our regulator.
Very Machiavellian! But, what is so different about Big Brother in this case? It seems that no matter the name you give them, regulators or bureaucrats, they seem to lack one important ingredient: common sense. Hey!
NCUA, take a closer look at these "investments" you have allowed which have cost our membership billions!
Mr Former Examiner: I don't think the articles author is debating the specific issues of this credit union's performance or their guaranteed long term future viability. The issue is not should the CU exist or not -- even though that should be an issue for the members to decide based on what I've read on this issue to date. Remember that new credit unions should have 10 years to demonstrate financial viability and the data here clearly does not conclusively tell me they would not be able to do that in the next couple of years. Still, to me the primary issue is about process and finding the most reasonable alternatives to very expensive and damaging liquidation procedures. Is our system regulator (seperate regulator for coops by design) here to support a strong industry or aid in its demise.
In addition, I think this brings out into the open something that is very troubling to many of us regarding NCUA's unchecked power and stacked deck persuasion tactics that make them judge and jury. More troubling what little respect they have for our own legal system and due process. Once they decided to liquidate despite the court case they effectively closed the door.
The agency can make all the excuses they want for why they closed this CU. Their process and rational though when alternatives existed need clear explanation. It is our money (NCUSIF) they are spending!!!
As a former exqminer I can tell you that NCUA has many faults but the action they took here was warranted. If anything they probably gave this credit union too much time to correct their problems. We all pay when they allow credit unions to continue to operate in a unsound/unsafe matter. One would only need to look at the track record for this credit union to see that it probably needed to be closed long before this!
What the NCUA has done to our industry in the last 18months is a travisty. Every word out of the examiner mouths is "we will do whatever it takes to protect the insurance fund".They have been given their marching orders and are ready to pull the "300" on whoever they can. We are all held accountable to our boards and members, yet who is the NCUA accountable to?
The key element in the scenario Mr. Filson describes is the seeming subversion of due process. It seems premature to label the NCUA's actions as Machiavellian, yet they appear on the surface to be, at least, heavy-handed with a flavor of arrogance. It would seem appropriate that CUNA should make an inquiry as to the details of the decision to liquidate and perhaps solicit congressional oversight of the procedures should the NCUA not be forthcoming. Certainly an effort to ascertain the facts should be pursued before a condemnation. While power can corrupt, not all with power are corrupt. Should we not focus our efforts on finding, exposing and dethroning those who misuse their power?
Why would NCUA risk contempt of a federal judge, and the adverse pubilcity of liquidating a credit union with such a prominent African American organization FOM? Certainly, a credit union of less than one million in total assets did not represent any material threat to whatever is left of the NCUSIF. One has to think that such a rapid, risky action to liquidate that credit union and sweep it under the rug must have been motivated by some desire to cover up whatever may have been happening there. Perhaps it was being used as a conduit for some nefarious purposes? Perhaps with some level of administration involvement? It also came just shortly after the takeover of the Chicago FI with ties to a social organization. Perhaps the same scenario there.
Small credit unions around the country, the ones that CUNA and NAFCU use to defend the tax exemption, are watching to see if CUNA or NAFCU stand up against this arrogant abuse of power. Callahan seems to be the only voice left willing to even suggest criticism of the imperial NCUA.
NCUA, under Ms. Matz, has already succeeded in muting CUNA and credit unions. Now it wants to intimidate Federal Judges. Even the mafia didn't mess with Federal Judges.
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