✅ "A well-crafted metaphor uses consistent imagery ("hitting the nail on the head”). When you start mixing imagery ("hitting the nail on the nose"), you can create a type of malapropism known as a mixed metaphor."
The mixed metaphor thought came to mind in reading a follow-up story in CUToday [link] on the call, by the leadership at DCUC, for unity among credit unions [see Golden Rule/Retriever post]. “If we’re serious about unity, this is how we achieve it; it's one hour a quarter”
As you'll note, the Monday unity meeting drew scant interest, with fewer than 40 of the 180+ DCUC members "showing up". A poorly attended unity meeting smacks of mixed metaphor!
Another classic was launched by DCUC chief lobbyist, Jason Stverak: "“When we’re doing the blocking and tackling on Capitol Hill, it’s critical that we’re rowing in the same direction.” Blocking and tackling don't seem to logically mix with rowing; and rowing on a hill is also a bit of a stretch.
DCUC CEO Hernandez clarified, "Complicating those efforts, are what he described as “muddy” factors... that affect how and when we can move (presumably rowing) forward (presumably uphill).”
✔ Credit unions used to be a "well-crafted metaphor" - a not-for-profit, member-owned and member-controlled cooperative, providing financial services to a limited group of individuals, particularly those of modest means.
😎 Hesitate to muddy the waters further, but the actual unity problem is simple: Credit unions are no longer in the same boat.
Have credit unions become a malapropism, similar in look to the original definition... but in practice, now a vacant vessel sailing down hill?
Troll trash alert. Mr. Ridiculous deleted.
ReplyDeleteTroll Hissy - also deleted . Merry Christmas!
DeleteIt's really hard for any organization to stay focused on "whatever it says" matters most when it starts making real money. (Businesses, universities, hospitals, NCAA sports, churches, non-profit organizations, politics, you name it...) I think this is definitely true for credit unions. When starting off, the mission is always central. However, it's really easy to stray from mission when the ROA starts to grow. (The credit union mission is great, indeed. However, the credit union model can lead to very significant profits.)
ReplyDeleteI have seen lots of great people and organizations fall victim to this. SECU, though, was able to avoid this trap for many decades. They were one of the largest and strongest, but always seemed to be singularly focused on service to the members. They also seemed to care for and respect the small credit unions. There were others who claimed this as well, but their actions betrayed them and allowed folks to easily see what they were really about. I feel as if I am witnessing a change to this over the past few years. SECU now seems determined to operate more similar to the way that banks operate. I'm not an insider, so maybe I'm wrong. From what I've seen, though, this really feels like it's the case.
Disclaimer - I've been a member of SECU for 33 years. I also have accounts at several other community and national banks. However, SECU has been my go-to institution from the very beginning. (Mortgage loans, car loans, personal loans, savings accounts, etc.) In the past four years or so, our entire family is starting to lean into the banks much more heavily. When long-time members like us start to go elsewhere, something is wrong. We really hope to see things get back on track...
@4:59PM It you believe the garbage on this blog rather than SECU itself, bye!!! Don’t let the door hit you on the way out. We’ll be here when you return.
DeleteSuch an unintelligent, juvenile response.
Delete10:48. Is this an example of the new, modern, caring, "model" credit union employee, who has selective hearing? The large mirrors in branches...meet SECU owners - you're looking good, may have been a true reflection of this cooperative at one time, but maybe now it only applies to some members. If you are not a yes man/woman, then you should shut up or leave. It has been said here over and over that the credit union was established during hard economic times as described above (well-crafted metaphor). Established with humanitarian values, not-for-profit, cooperative and member-owned, credit unions were not intended to follow industry (for-profit) standards. As another poster said, credit unions need to get back to basics, core values and principles. - c
DeleteI don’t agree with most things said on this blog, but I disagree with this comment more. Just because people do not agree with you does not give you the right or justification to be rude. Members are the reason SECU exists and the reason you have a job. @4:59 I apologize for the above commenter and we will continue striving to be the trusted financial provider that you deserve. Thank you for your loyalty over the past 33 years and we hope you will continue to consider us for your future financial needs.
Deletewow must have hit a nerve ...
DeleteI started my credit union journey over 50 years ago. I have been blessed to serve at all levels. I have had wonderful conversations with many great minds in the industry. I hope that current Board members of SECU read this site.
ReplyDeleteTheir misunderstanding about what made SECU great is damaging to their franchise. Using Bank think will screw over the membership, just like every other credit union that tried it.
I used to enjoy SECU's battles with the regulator. I was like a spectator sport watching. I often found it curious that the regulator saw SECU as the enemy instead of a place with ideas to emulate.
I have often questioned what made SECU so successful. They became the 2nd largest credit union. I am not sure how many state employees credit unions there are, but North Carolina was not the place that one would bet that amazing growth would be achieved with a State Employees FOM.
Navy had a predictable achievement because they had a much larger potential FOM that had new recruits coming in each year. You would have thought the Regulator would have tried to bottle SECU's secret sauce instead of trying to force the compliance with their many times misguided orthodoxy.
The SECU Board has lost its way and has turned its back on credit union values. The butt-spanking is coming. The credit union is not achieving like it was. True leadership would look at the trajectory of their credit union and ask difficult questions about why it is not thriving like it used to.
There is a simple answer. Every time a credit union gets infected with Bank Think bad things happen. Members are quietly voting with their feet.
Truly, credit union success will sometimes lead to the collapse, and the enemy is from within. B
None our Board and most SVP’s and above never worked at a bank. Why could SECU grow like that? Because we bought the deposit market, non and sub-prime loan market, and only 1/5 of our members are state employees. Not hard to figure why we grew and why others had no interest in copying our model. As for the regulators and the spectator sport. I guess we achieved all this growth despite their strict rules. Ever as why we had the fight in the first place? Because it was an ego-driven vanity exercise by the ceo. Don’t anyone dare challenge him and question his wisdom. It was made a spectator sport on purpose. Not something we should be proud of. Makes me wonder how the cu’s that were more successful than us (and, not judged only by size), succeeded with out publicly ridiculing the regulator. A big theme on this blog - this place can’t half as good we thought it was. We need to get over ourselves.
DeleteSorry but troll was getting frantic, gotta vent a hot air balloon every now and again...
DeleteOne comment about troll-speak: "because we bought the deposit market"... Translation SECU paid members better rates! Regret that trolls find that a bad practice, members didn't!
explain which credit unions were more successful and why delinquency and write-offs didn't become a problem until you arrived?
DeleteTroll trash alert! !!!
Delete"Putting words in my mouth, as always. Didn't say it was a bad practice but am saying it's an easy one and it drove disproportionate growth."
Translation: but, but, but, butt...
If it is "easy" to pay members better rates would suggest that you do so. Believe they would appreciate you doing something productive like that with your time. Remember who owns the credit union...real people, not but, but, butts!
I wish I could add a heart emoji for 11:51. - c
DeleteI am not sure the Anonymous post suggesting that there was a problem with higher dividends lower loan rates and fees is a problem understands the Accounting Equations for a credit union. Because profit is not a part of the equation, credit unions should pay better rates for shares and loans with lower fees. Simple stated: income minus expenses Minus reserves for potential unidentified expenses and losses remainder is zero. Excess is the rightful due to the members. It was impressive how SECU prior to 2018 had a discipline of maintaining capital between 7 and 8%. The remainder was returned to members in the form of higher dividends, lower loan rates and fees. It takes a commitment to frugality to achieve this competitive advantage. When you returns are better, your loan rates are lower, and you eschew fees the credit union becomes amazingly successful. B
DeleteThe question was about growth, and it’s no mystery how SECU got its size. Buy the deposit market, exploit FOM rules and give loans to anyone that can fog a mirror at below market rates. The term for that is adverse selection.
ReplyDelete12:01pm Troll Alert!!! Hot air hissy!!!
DeleteMore but, but, butt from Mr. Ridiculous... but let's see 1) didn't have an answer to why it was bad to pay credit union member-owners better rates? 2) didn't have an answer to why it is bad to charge member -owners "below market rates" on loans?, 3) didn't have an answer to why loan losses only soared with the trollish new/new?
higher rates on savings + lower rates on loans + low losses = "adverse selection"?
Looks like troll trash logic to most folks in finance or a definition of incompetence
Probably need to ease up, our troll is becoming incoherent, foaming at the mouth... members would prefer better rates than more gibberish.
DeleteWell in fairness, the troll did respond. Quote: "Blah,blah"... which kind of sums up well his thoughts,.Will spare readers the rest!
DeleteMerry Christmas!
Troll Trash Alert!!! Troll has reverted to kindergarten level economics lessons ("infantilism" as Ed Speed would say)... take a look at our troll's latest noblesse oblige :
ReplyDelete"Profit short of execution. You need net income to build capital. Maintaining 7-8% capital, while irresponsibly low, requires profits/ net income to even maintain that ratio when assets are increasing."
Quelle surprise!
Our troll appears to be in over his head. Scary proposition if our troll actually works in a credit union and anyone is relying on "troll trash expertise"... loose cannon, short range.
Credit union members, at least at SECU, should know that the Federal Credit Union Act legally and specifically states that a credit union is considered "well-capitalized" (the best ranking) if it has capital/reserves greater than 7%. That's federal law and SECU has always been well capitalized.
But there is another measure of capital that attempts to take a closer look at the actual level of risk within a credit union. That measure is called a "risk-based capital ratio" and the regulatory level to be considered "well-capitalized" is 10%+. SECU's "risk-based ratio" is 20%!
Only real risk danger at SECU over the last 4 years has not been on its balance sheet...
Yeah, and the NCUA and division had nothing to say about being at 7%, right? Read those exams. Regulators and smart CU’s don’t manage to the 7%.
Delete10:16 am Infantilism 2.0: As it happens, I actually did read those exams for a long time and all involved agreed SECU was well-capitalized. - sorry, blowing hot air again without knowing what you are talking about - getting to be the norm?
DeleteYou fail the competency test big time in two other ways:
1) Regulators - smart or otherwise - don't manage credit unions (although they've certainly been known to try!)
... and most importantly (and why I hope you don't work for a credit union)...
2) a "smart" credit union should manage capital to the lowest reasonable level possible - which is in the best interest of members (despite what regulators - smart or otherwise - and trolls - always otherwise - might conjure up.
Sorry to disappoint! I do work for your credit union. Hayes era hire,
Delete3:45pm Certainly shows!
Delete3:45pm ... and if so, get back to work! SECU members aren't paying yo to be a troll on this blog. An easy "expense" to cut?
Deletemembers don't pay my paycheck.
Delete5:17pm Then who does?
Deleteno let em keep blogging, they'll do less damage to SECU ...
DeleteTroll Alert!!! Infantilism 3.0::
ReplyDelete"Didn’t say regulators manage credit "unions. Said they don’t manage to 7% capital in their role. Remember, the “C” in your crappy CAMEL ratings?"
... but, but, but, butt... Glad you agree that regulators don't manage credit unions.
One would hope that the regulators would "manage" to the law "in their role", don't you? Especially, since as you acknowledge, regulators have no experience managing a credit union.
Again, SECU through the first 85 years at least was always "well-capitalized" and was never fined nor sanctioned for any non-compliance or operational failure.
Don't ever recall "crappy CAMEL ratings", when did that occur?
Might check this out too... SECU is the only large credit union to never experience a quarterly loss in its entire history... that's not too "crappy" a record.
Frivolous point. Regulators "managing to the law" doesn't mean they want or would accept the large CU's capital ratio to be 7.01%.
Delete3:48pm But, but, butt... you seem to lose sight of reality from time to time.
DeleteYou kinda hang yourself out to dry again by proving the point: What federal regulators "want" in terms of capital is unimportant - if it is unjustified. (Hope even a troll would agree with that !)
Yes, federal regulators always wanted more capital - guess that's part of their job description. But what they wanted was unjustified!
How do you know it was unjustified? Because to use your words they always had to "accept" the truth...SECU was always 1) well-capitalized, 2) never had a loss in its history, and 3) was always rated by the regulators as save and sound. (And, you don't "get lucky" in business for 85 years in a row!)
So were the regulators wrong, just had "to accept" reality, or were weak an ineffective in their exams??
Well congrats to you - you met the statutory min of 7% to be well-capitalized. Impressive leadership!
Delete4:39 pm I take it you mean that in jest? Difficult to tell sometimes, your logic doesn't track a consistent line.
DeleteBut, but, butt... for the sake of argument: If you can manage the CU safely to a 7.01% capital ratio rather than any higher unnecessary ratio ; then yes, you are a better steward of members' money - no exceptions.
BTW, that's called capitalism! And is how capitalism works... even in not-for-profit cooperatives.
Think about it a little, before you insert your foot in an inconvenient place again...
That's what you don't get. 7.01% is not a safe level, even if over the well-cap MINIMUM of 7%. How do I know that? Because in 2008 and 2009 you were unsuccessful keeping it above 7%. Explain how your statement that we've always been well-capitalized is not a lie.
Delete4:54. Wrong again, one rate for all was socialism, not capitalism.
Delete5:38pm Breathe deeply ... you're havin' a hissy. Sorry you didn't know how capitalism works.
DeleteThe crappy CAMEL ratings came out about 82 or 83. It was a replacement for their Early Warning System (EWS) It was a internal rating system that NCUA used to allocate Examiner time. It was not reported to the credit union. As credit union grew in complexity, the EWS was replaced by CAMEL. Each letter got a rating so you could quickly understand what the issue was. Over a lot of objections, it was decided to give this rating to the officials. I regret that people who were former Teacher's Pets never understood what the CAMEL code actually meant! The only time you should worry to much about a CAMEL code was when it becomes a 5. The regulator is indicating potential collapse in near future. B
ReplyDelete2:59.. that's wise. camel drops from 2 to 4, but start worrying once it's a 5? that makes a lot of sense. They're start dictating action plans and issuing MOU's at 3's and 4's.
DeleteFYI: to Anonymous 4.59 If you are a director and don't know your credit union is in trouble, you need to get a new volunteer position. There are many reasons for a suggestion that CAMEL sends a lot of false positive indicators, if used for purposes other than intended. The Regulator needs a tool for resource allocation, NCUA used a tool called Early Warning System prior to adopting CAMEL. Its best use was giving subsequent examiners a quick guide to what perceived problems were impacting the credit union so they could reduce their preparation time going into an examination.
DeleteThe CAMEL Code should have been used for nothing else especially providing it to the subject credit union. False positive indicators are a bigger problem than an individual subjective rating.
FYI: to Anonymous 2.59 If you are a director and don't know your credit union is trouble, you need to get a new volunteer position. There are many reasons for a suggestion that CAMEL sends a lot of false positive indicator if used for purposes other than intended. The Regulator needs a tool for resource allocation, NCUA used a tool called Early Warning System prior to adopting CAMEL. It best use was giving subsequent examiners a quick guide to what perceived problems are impacting the credit union so they could reduce their preparation time going into an examination. The CAMEL Code should have been used for nothing else especially providing it to the subject credit union. False positive indicators are a bigger problem than an individual subjective rating.
ReplyDeleteIf we just focus on the C of CAMEL, we can look at a defective use of the tool. I was asked to come back into credit union management to save a credit union from NCUA's assistance with getting out of problems cause by a Banker posing as a Credit Union CEO. The credit union when from very very well capitalized to Prompt Corrective Action.
NCUA was all about protecting the FUND! Here is the rub. Yes, the credit union make considerable mistakes that had to be written off, and this raised caused losses that caused capital drop. The regulatory concerns were justified, but over blow concerning threat to the Fund.
Once the bleeding had be stopped, the credit union became profitable, and it was a matter of time solved NCUA's concerns. At the lowest point the credit union had over $18 million in unincumbered reserves. The prior bad management cause a 12-million-dollar decline in their capital. I am not suggesting that there is anything positive about blowing 12 million dollars, I can say without doubt that NCUA's solution was inconsistent with reality!
NCUA solution contained in their very threating Letter of Understand would have cause a collapse of a viable credit union and forced a merger!
The credit union attorney a former NCUA attorney were a part of a heated meeting with the NCUA Special Action Team. It was heated and ugly to the extreme. They threated all manner of extreme NCUA actions. We held fast to our position of go pound sand! We were unable to reach an agreement. NCUA's strategy was modeled. We modeled 3 separate models. Every one of our models bet the NCUA strategy. I knew that the NCUA field staff did not want to recommend a strategy that was inconsistent with the NCUA play book.
I wrote a letter to the Regional Director. It was made plain, that the credit union had nothing to lose by refusal because their strategy was a direct ticket to failure and merger. We did come to an agreement that we both could live with.
The credit union is still alive 9 years later the credit union is still alive with a greater than 10% Capital position. The new CEO is doing a great job.
I am most proud of her recent decision to dust of a loan product I developed in the 1980's that was an adjustable-rate mortgage (ARM) whose index was tied to the cost of funds of the credit union. Just looking at their website, the credit union is now offering these products as a solution to the affordability problems facing their members. Their offering price is 2% less than a conventional mortgages. The first-year savings on a 500,000 ARM Loan is about $10,000.
Credit union leaders doing nothing in the face of a problem that they have some partial solution are a disgrace to those who came before you!
You've missed the real point anyway - you should held more capital and taken more reasonable risks at the coop level, and not offloaded it to members. Hard to find $ to invest in tech and people, too when you manage to that low of a ratio. You act like there is a free lunch and just giving capital to members with below market rate loans rates and high deposit rates comes with no consequence.
ReplyDeleteThere are a statutory requirement and an optional requirement for capital. The Board determines the optional level. My former credit union's capital was around 10% when I stopped leading it. During COVID the credit union put a lot of 30-year fixed term loans on the book. I got the Board to approve removal of the limits on loan term fixed rate investments (loans). We took the action immediately after the Fed dropped rates by 2% at one time. Having the additional capital is helping the credit union digest the over position in a fixed term loan portfolio. It also makes NCUA's stress tests tolerable. I believe I saw several years ago that NAVY FCU had more than 12% capital. I to unmotivated to look up current ratio. I do wonder what the justification is for NAVY maintaining such a high capital position. I must say I was thankful for having NAVY located in the same area I ran credit unions. It was fun to compete against them because they were like the Baby Huey of credit unions. If they ever figured out, they were potentially stealing from their members by overcharging to maintain an excessive capital position they would crush a lot of the competition... B
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