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Asset Liability Management (ALM)
I read this piece and I can only think about a piece Chip wrote early in the days of the corporate crisis. It is clear that Chip, and most writers of the comments, have no clue when it comes to structured finance. Back to the piece Chip wrote in April 2009 - He showed an example of a security not taking any losses until 2016, using assumptions he stated were "economist's estimates of future trends". Well the security was written down to zero in 2011. So much for Chip's understanding of the securities in question. Chip should be held accountable for feeding bad information to his readers, which I must add are likely more clueless than Chip. Oh well, it's America where every moron can find a stage where people will listen. Here's a link to Chip's April 2009 piece: http://www.creditunions.com/articles/ncua-uses-pimco-to-implement-new-accounting-practice-mark-to-model/
In an effort to be "transparent", NCUA raced to the cure at all credit unions' expense! Does no one question anything at NCUA on thier own actions? So worried about "catching" ineptness at the individual credit unions, they completely miss the real issues.
The demise of the Office of Thrift Supervision (OTS) was caused by losses from Washington Mutual, Countrywide, IndyMac and others. The OTS lost its independence and was absorbed into the bank regulator (OCC). Is the NCUA next? Can the NCUSIF handle the next round of industry losses? For example, who is regulating Navy FCU?
The next credit union crisis will follow the same pattern as the last one. The largest institutions will beat down the regulator allowing for additional investment authority or lending risk capabilities to earn an additional couple of basis points and their wish will be granted. A few years down the road, the limits will be raised and then a few more years later the business model will fail. The NCUA will blame the credit unions, although the NCUA throughly studied the concept and set the regulations, and then the NCUA will over react. Followed by, more regulations so this 'will never happen again' and the majority of credit unions will pick up the bill! For you Talking Head fans, 'Same As It Ever Was'. Great article Chip!
It seems clear that part of the problem was also the "fat" that was added over many years at the corporate credit union executive level. It ended up being a race to shrink and make the over-spending disappear.
thanks for an informative article
I'm suprised that this article didn't mention CapCorp, another overreation by NCUA against a corporate. The truth is NCUA doesn't have the expertise to understand the complex investment environment large CUs now operate in. The real question we need answered is, who in NCUA wanted to kill the corporate system and why? The bankers so they can steal our system?
Thank you Chip for continuing to speak out. This has been a travesty from the beginning. the fact that no one is willing to comment and put their name on it (me included) is a good indication of serious problems in regulatory oversight on the federal level.
All I can say is...absurd. Yet we keep hearing the same things over and over with the present NCUA leadership. We will continue to pay for their errors and shortsightedness for many years.
These are important points to be made. Thank you, Chip, for your insightful comments and for keeping up this issue in front of people.
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