June 10, 2013


  • Remember that the NCUA has two cardinal rules: 1. Protect the sanctity of the insurance fund at all costs 2. Never let anything negative happen on their watch
    Another Anonymous Arrowhead Admirer
  • Thank you Chip for this report, it has been long over due. It tell how NCUA has developed into an agency of Big Brother knows Best. Thank for writing this piece. From an old Friend
    Charles Gneuhs
  • I couldn't agree more with this article. While I wasn't close to the Arrowhead situation, I'm sure we all have similar examples close to home. I certainly do and I wrote a letter to CU Times detailing a similar financial miracle back in 2011. I concluded that letter with the following paragraph, which I still stand by: "I’d like to see our share insurance assessment reduced just as much as any other CEO. However, if it comes at the cost of the NCUA removing credit unions from their members by forcing mergers based on phony numbers–count me out."
  • Isn't it interesting that the majority of us have chosen not to list our names? For those of us who were close to the situation, we know that what they did to Larry Sharp and his team was personal. They wanted to send a message and make an example of him. They walked him out through the middle of the call center in front of all the employees. Deb should be ashamed of herself and what she has done to the credit union movement. The were prepared to do this to several other credit unions, but against all odds North Island fought like hell and survived. There were several others that should have survived but didn't, because they were never given the chance to sell off valuable assets which would have replenished their capital. Did you know that even if you have the capacity to restore your net worth, the NCUA could deny you the ability to do so? Under the threat of removing the entire senior team, the NCUA can instruct a credit union not to enter into negotiations that would save them from an unwanted merger. The NCUA will defend their actions by saying they were preserving the fund - several of those conserved and merged credit unions in southern California were over provisioned - there was no threat to the fund. You wouldn't believe it could ever happen until you live through it. It doesn't seem possible that you could ever be in a position to have to tell the employees of your credit union that the NCUA has deemed their credit union incapable of recovery. It doesn't seem possible those veteran leaders could be treated with such disrespect and that lies would be passed through the media from the NCUA with their spin as to why they were over-reaching. This article brought tears to my eyes and took me back to 2010, when we fought like hell for our credit union and failed. The Arrowhead story is one of many, and the Deb and the rest of the NCUA leadership team should hang their heads in shame when remembering what they did.
  • It is obvious you never ran a bank or a credit union. Reserves are the best if arrived in an empirical derived. But, shifts in economy can alter total needs. That is why you need a veteran executive. He was smart to load up on reserves in the early years. You can always use the reserve to inflate your earning later. That is life. Get over it!!! It was well played!!!
    jack Y
  • These agencies continue to do what they want with no concern that anyone will Do anything. We can write all the op ed pieces but no one actually cares enough to take action. Fire these guys!
  • Is the process of determining the need to conserve a credit union public? Is there a Review Board that "blesses" such a serious decision before the action is taken?
    Alice Stevens
  • Good questions, and the answer to both is no. The current process provides for no effective opposing views at any stage.
  • Excellent article, Chip. This conservatorship was a travesty then and even more so now. It was clearly a vendetta action against Larry Sharp for speaking out on issues. Many of us who watched this unfold believed that ACU's management team was on the path to correcting the situation, and the conservatorship and public shaming was massively unnecessary. There are regulators out there who take actions based on their individual opinion of a CEO and not based on the numbers or strategy involved. This abuse has to stop.
  • Great article, Chip. In our land of free speech, just look at all the fear among we writers, myself included, to openly criticize the NCUA for its unjustified actions against Larry Sharp and Arrowhead CU. What the NCUA did to Sharp and Arrowhead is an absolute travesty, and scary, indeed. The NCUA has vast power over us, and when it abuses that power, it makes one think not only of government overreach, and to be sad, as some writers here have commented, but it makes one want to go back and read the history books about how communism used to operate. And I've never been a "communist conspiracy" sort of person. I will be fascinated and amused if any writer here comes to the defense of the NCUA for what it did.
    Land of Free Speech. Really?
  • Clifton Gunderson (the external auditors) should be sued for malpractice in allowing what occurred. They obviously are unable to properly read financial statements and measure risk.
  • This is absolutely no surprise at all, especially to those of us who were there at the time and suffered the consequences. This is yet another prime example of government overreach.
  • Excellent article. Knee jerk reactions from inexperienced auditors created unrealistic loan loss reserve demands from the NCUA. Other credit unions and their members in the Inland Empire also suffered. Too many experienced financial experts lost thier jobs because the NCUA could not hire experienced people.
  • Excellent piece Chip. This is clearly one of the most obvious examples of government abuse in the CU industry, but so many others are out there. There is no accountability for this kind of whipsaw and the resultant lives if affected. Did NCUA even issue an apology? That will never happen. NCUA operates with near perfect impunity. My suggestion is that you dig into other similar situations and shine the light on just how often ALLL sandbagging happens by NCUA, followed by management and board replacements, followed by wildly negative provision expense for several quarters. It's a very efficient way for regulators to bypass codified limits to their authority.
    Yeah, Right
  • The NCUA wanted for years to punish Larry Sharp for his out of the box thinking and risk taking and in 2010 they found a way. What better way than to publically humiliate him and his executive team. Arrowhead wasn’t perfect by any stretch of the imagination but they certainly didn't deserve what happened to them. A lot of members were hurt by the NCUA instead of being protected by the regulatory agency. It's a sad story.
  • Excellent Op Ed Chip. This is a case study and lesson that should not be ignored by the NCUA Board. Thank YOU!
    Rich Jones
  • I had known the senior management of Arrowhead for more than 25 years before the NCUA takeover, and they were quality people who understood finance. By all accounts, they were on the right track when the seizure happened. It's great to have this analysis.
  • I have compassion on Arrowhead CU’s situation and pray for the CU's management, volunteers, and staff to persevere during this season. I hope that things will be made right - as we say in Hawaii, “pono”.
    W C Rol
  • Right on. I smelled a rat when I got the email blast from NCUA saying how they had "turned" around Arrowhead Credit Union. Thanks for brining the truth to light.
  • Chip, based on your analysis, your comments are right on the mark. The regulators have a habit of jumping to conclusions and not getting a true handle or be willing to learn or understand things that are different.