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anything, but make sure you get out there

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Hey everyone.

This is Marc Treichel with another
episode of With Flying Colors.

Today, I'm excited to be
here with John McKechnie.

John, how are you doing today?

Great.

Thank you, Marc.

Thanks for having me on.

How are your Orioles doing
heading into the all star break?

They doing okay?

Birthplace.

I'm happy.

Last time I think I was on, we talked
about NFL football, and I of course

talked about my Ravens, and now
I'm talking about the Orioles, so.

That's right.

My twins are doing okay.

They've got a few injuries.

Carlos Pereira just got plantar fasciitis
for the second time in about 12 months.

But other than that, we're trying
to track down the Cleveland Indians.

I, I agree with you.

I'm just trying to keep
you between the lines.

Trying to keep me between the lines.

It's a good reference for baseballs.

John, you and I go way back, but some
of our listeners may have heard you

on a couple of our other episodes.

But for a listener who may not be
aware of your background, why don't

you give a little bit of your,
your background in credit unions?

Thank you.

I, it's a long, a long background as,
as I, as we move on through the years.

Um, I worked on Capitol Hill in
the late eighties, joined CUNA.

In, on April Fool's Day, 1987,
which I think a lot of people

know me will think is appropriate.

And then was with CUNA for 18 plus years.

And then I moved over to NCUA
where you and I were colleagues.

I worked for three chairmen, Joanne
Johnson, Mike Freisel, and Debbie Matz.

And it was actually during some of the
most interesting years we've had at NCUA.

And since 2011, I've hung out my shingle
and been a consultant in the industry.

And never a dull moment for a
dull moment, a lot going on in the

world and a lot going on in credit
unions as we sit here in July.

Now, the topic of the day is crisis
communications and lessons learned

from good or bad crisis communications.

But you and I were chatting about
some things going on in the industry,

and it made us reflect on some
things that we recall at our times.

That's it.

I'm just going to loft that up there.

Crisis communications and lessons learned.

So.

Uh, what, what's your take on, on how
an institution, uh, should approach, uh,

crisis communication and then perhaps
any lessons learned relative to that?

The obvious starting point, I think,
where you and I intersect was, of course,

the, the financial crisis of 2008,
2009 into 2010, just because NCOA was

so front and center when things hit.

And, of course, Any good crisis, I
think, starts on a Friday afternoon.

And, of course, in this case, I
remember my assistant came into my

office on a Friday afternoon in late
July of 2008 and said, hey, you better

turn on the TV, which is always a bad
thing to start a conversation with.

And I turned it on, and there was an SNL
in Los Angeles that was having a run.

And you could see CNN had the helicopters
flying over this street scene of

people lined up around the block.

And right away, people
are seeing that on TV.

It's going to send shock waves
through the financial world.

And sure enough, it did.

That was, I think that may have been
the first domino to fall because what

happened over the next month or so
was that the, the liquidity markets

froze up, the mortgage market froze up.

And even though that particular
incident was something in the SNL

world, it's credit unions certainly
were affected quickly to the point where

the liquidity strains in the industry.

Uh, necessitated NCOA scrambling quite
a bit to get the central liquidity

facility upgraded and updated.

That that required a pretty
heavy lift on Capitol Hill.

Fortunately, even though the industry
wasn't accrediting and trade weren't

happy about it, but they knew that
their members desperately needed this.

But the point of that is not
so much crisis communications.

It's just the fact that.

It accelerated put a lot of pressure
on everything that happened.

And of course, consumers did.

That saw these, this evidence of
a run at a thrift, they began to

ask a lot of questions to NCUA
about how their credit union was.

And I remember we had a, we still, NCUA
still does have an 800 line and a little,

a button on the web page, how to get in
touch with NCUA about your insured funds.

And in a month, we would get maybe
50 inquiries on that telephone line.

In one week, we got 200.

After that, the thrift problem started
and it just went downhill from there.

So, I would say, as a 1st and foremost
thing, you, as a credit union, need to

always be very cognizant of the fact that
you have to inform your members about the

safety and soundness of their funds and
remind people that no one has ever lost

a penny of insured, federally insured
money in a federally insured credit union.

That's probably the first, I say
that's lessons number 4, and 5.

Make sure people know their money is safe.

If they've got it in a federally insured
account, make sure they know that.

I understand from a couple recent
examples in credit union land where

credit unions had problems with
cyber breaches and things like that.

I understand anecdotally that message did
not go out as quickly as it should have.

And let that be a lesson to everybody.

It needs to go out first.

Thank you.

It's got to go out.

It's got to go out quick.

It's got to be accurate.

Got to be, and it's got to
be in quick meeting first.

Now that's the reality is if you don't
communicate, the vacuum is gets created

and the water cooler talk starts or
the people in line start conversation.

So you can, you want to be truthful, but
there's a truthful narrative that you

can tell by getting out in front of it.

That's a great way to put it.

And I also add that when you're
with the federal government, like

we were, I think you really have to.

Put an emphasis on being
the first with the truth.

Get out there, make sure you're
transparent, make sure you're above board.

Now, in accrediting context, that's also
important because you need to, you're,

you are going to be the authority that
your members look to, and you really need

to be very transparent and always keep
in mind that you're trying to, you're

there to help them and you're, you're
there are a member services, making

sure they understand what's going on.

Again, be authoritative, be truthful.

Be transparent.

These are the kind of things that they
sound elementary, but when there's

a crisis going on, maybe it's not
always apparent what you should do.

And also, it sounds obvious,
but keep your head just realized

that you've got a job to do.

You know what you're doing.

You're the experts.

Get it done.

As you're walking through
that, I'm thinking about.

Again, credit unions, but I'm thinking
about our time at and we had and they

still do they have a very robust list
of delegations of authority, right?

This person can do this.

Uh, regional directors can do this.

The executive director can do this.

The board retains this.

Et cetera, et cetera.

And part of that is if the executive
director's not available, or if regional

directors or the board's not available,
having set things in motion so that you

can move quickly in, in the case of the
crisis, let's say a plane went down,

let's say, uh, just people, the, the, the,
the, the internet on the East coast went

down and we would tabletop these things.

And I, I was talking to.

A credit union about cybersecurity
and they're having their planning

session and the tabletop exercise
they're having at their retreat

this month relates to cybersecurity.

And then some things hit the news
where some credit unions were

filling challenges with that.

But having the delegations of authority,
having a plan, the same can be said

for credit unions being prepared and
having a crisis communication plan,

having a team where you've tabletop,
tabletop exercise, some of those things.

And or having outside resources
available, potentially at the drop of

a hat, should something go bad that you
can use as part of your, as your plan.

Any thoughts on what I just said there?

Oh, you're 100 percent correct about it.

Omar Bradley, during the 2nd
World War, used to say that when

the fighting starts, plans are
useless, but planning is essential.

And I think that strikes the
core of what you just said.

You've got to have gone through the
planning process to think about the kind

of things you're going to deal with.

Admittedly, once stuff start, it
gets a little bit difficult to try to

adhere to a piece of paper, but having
thought about going through these,

the process, you have to do that.

And I commend any credit union that
goes through these kind of exercises,

just get your minds thinking
about how to respond and react.

And I would also jump back again,
you mentioned something about

a crisis communication plan.

I, again, have heard quite
a bit in the last year.

From various credit unions that
have had cyber breaches, have had

ransomware, et cetera, et cetera.

And in a couple instances, credit
unions did very well and got

through it with flying colors.

For your shows plug for your show
there, but the other the other

part of it, though, is that some.

Credit unions did not, in fact, have any
kind of communication plan on the shelf.

And they wish they did once they
find out how important it was when

things started to hit the fan.

But, yeah, I think anybody listening
to this podcast ought to understand

that get something on paper, get some
kind of communication plan on paper.

You talked about the tabletop activities.

That's important.

Delegations of authority, of course,
government is a bit different

than the private sector, but the
process is really important to

think about the kind of things.

You need to focus on and I'll say 1
more thing that'd be quiet and that

is that 1 of the most important things
about any communication, whether

it's crisis communication or not.

You have to figure out what audiences
you want to touch and do that early.

So in the case of a credit union,
who's experienced in some kind of

breach, your first and foremost
audience has got to be your membership.

Everything else takes a backseat to that.

It's a great point.

You've got, you've got the, who are
the key stakeholders, the employees,

the members, the media, the regulator,
that, that checklist, that planning,

that tabletop exercise would be okay.

Who are the stakeholders?

What's the order of importance?

You know, and when I think about
when I think about checklists, I

think about the NCOA version of a
disaster is a conservatorship action

that needs to be taken on a Friday.

Right?

And there's a, I don't know
how many pages long it is now.

4, 5, 6, 7 page checklist.

The conservatorship checklist, you
go in, you count cash, you remove the

officials, you call the corporate,
tell them that that there's a change

of signature, you change the lock.

Every time NCOA does a conservatorship,
they come across something that they

hadn't thought of, like you said,
doesn't the plan is there and then the

chaos hit, but you have that kind of
as your beacon that you can go back to.

And at the end of the conservatorship,
you go, you know what, we came up

with a new thing for the checklist.

But by having that plan in place, you
have a more methodical approach by

having a committee that's looking at
it by having a group of people that

have what their responsibilities are.

Right.

You talk about the.

The stakeholders, who's going to
communicate to the employees, who's

going to communicate to the members.

It should be someone high up, right?

Perhaps all the way to the top, whether
it's the board chairman or the CEO,

who's going to communicate with the
media and then making sure that you're

all singing from the same hymnal.

There's a saying about the
experience is the best teacher.

Unfortunately, bad experience
is the best teacher.

And I heard since I've been doing my
own thing as a consultant, I encountered

one credit union that essentially after
I was brought in, they told me this was

maybe 72 hours after they knew about
the breach, they mentioned to me that

they'd been dumping the calls of their
state regulator for 24 plus hours.

And I don't know what my facial expression
was, but I don't think it was good.

The point is don't do something like that.

Don't you can't try to.

They'd or or avoid the legal authorities
that you have to deal with in the

case of this particular credit union.

It was a state charter federally insured.

Don't do something like that.

I think everybody at that credit, you
knew it was a mistake and yet they

didn't know what to do, but we're
making it sound drastic and it can be.

But if you know what you're doing
and you have thought this through,

it doesn't have to make things worse.

As a matter of fact, you can make
things a lot better for everybody.

And you, as you were talking, I was
thinking about when 9 11 happened

in New York City and the, all the
communications in the, in New York

City were down, banking systems
were down, ATM networks were down.

I can remember a couple
of large credit unions.

I was the regional director at that
point in time and they had a plan in

place and they, they put it in place.

And they essentially were letting
people get money, even though they

couldn't reconcile, people could get a
certain amount of money out every day.

And you know what?

That costs them money.

But they went into it knowing if
something like this happened, that

they were going to strategize that way.

Of course, it far exceeded everything
that they thought they were going to do.

But because they had done some
planning, they were able to

pivot real quickly and go, okay.

There's going to be losses here, but these
people are going to need money as well.

Our members, we need to take care of our
members going back to who comes first.

Right.

It's the members credit union.

And you know, when, when you do
have a cyber attack, when you do

have ransomware, that prevents.

It's going to provide good service
and then there are going to be

people who take advantage of that.

And ultimately, you're going to
end up having some losses, but

you got to think about the long
term and how you're treating those

people in their time of need.

Yeah, and that's well said, and I think,
um, in addition to that, look at this kind

of problem, if you will, as a opportunity
to remind your members that you're on

their side, that you're here to help.

And what you just described
is a good example.

Of credit, you stepping up when everything
was going to heck here they are, they're

here with some money that I needed.

People remember that.

They do.

They do.

Any thoughts on it?

You've got people get their
communication through Twitter.

People get their communication
through Facebook.

People get their communication
from coming to the branch.

Obviously what, where you're at on
the journey of life kind of determines

which one of those ways you're going
to, you're going to communicate.

Some people want email.

Any thoughts on having a broad plan
that, that incorporates multiple ways

of reaching your members in a crisis?

That's the personal thing for
me, because I am not a tech guy.

I'm not, I use the internet
extensively in my work.

I'm addicted to my iPhone and all
that, but I'm not really a social

media user per se, but I can remember
when you and I were colleagues.

And I was the head of the Public
and Congressional Affairs Office.

I knew that I had to go fishing where
the fish were biting, meaning you had

to go out into the social media channel.

So I got help.

I got somebody within the agency and
then later outside the agency to help

me design a communication plan that
maximized our messages to people.

And by the way, this is not
strategic as much as it's tactical,

but I always recommend that if
accrediting has a problem like this.

They set up what is called a landing page.

That's something on the website.

Like, you can click a button
on the website on the credence

website that directs the
member to a specific dedicated.

Age, it's full of all the
information 1 stop shop.

When everything you need to know about
this particular breach or whatever,

it's going over the ransomware
cyber attack, whatever it is.

That landing page will be a 1 stop shop.

That's something that always recommend.

It's always a good idea.

We did that at the agency.

We had a special, it's essentially
you're creating a parallel web page.

So when somebody came to NCOA's
page back during this mortgage

crisis, if they wanted to, they
could be directed to this other page

that gave them what they needed.

Really important.

I know it sounds basic.

No, that makes sense.

By the way, my website is marktreichel.

com.

I actually bought Mark
Treichel spelled wrong.

With the E and the I flopped because
so many people spell it the wrong way

when they type it out to me that it'll
automatically roll over to the right

pronunciations, just a non sequitur
there, but having another, having an

alternative website ready to rock and
roll where you can make those messages

device and focus makes a lot of sense.

I have a name like McKechnie
and see how that goes.

M little C big K, right?

You.

You have these plans, things go wrong.

You learn from the plans.

Hopefully you're able to serve your
members and get through it to fight

another day, and then you do a postmortem.

When NCA loses money,
I think it's over 10.

If a credit union failure costs NCA
more than $10 million, the inspector

General has to do a postmortem.

If it costs more than two or five
million, I think the Office of Examination

and Insurance does a postmortem.

And if it's less than that, the
region will do a postmortem.

Again, like the conservatorship
checklist, what did we learn here?

So, any thoughts relative
to crisis communication, the

aftermath, after the dust settles?

Yeah, never stop learning
from the mistakes, especially.

Taking a half step back, what
you were saying about what to

expect, it's the, what I call the
roadhouse theory of postmortem.

Public affairs.

There was a movie
Roadhouse, Patrick Swayze.

People throw beers in that.

Yeah, they do.

And we threw a lot of beer at
NCA back in those days too.

But Patrick Swayze had this great speech.

He gave, he was the bouncer in a
bar and he gave a speech to his,

his, his fellow bouncers saying
always expect the unexpected.

And I think as part of these
communication plans, as much as we

talk about them in on this nice,
comfortable podcast we're doing, when

things are really happening, it's not,
not always easy to keep your head.

Expect the unexpected and just
expect that as part as a, as just a.

An ordinary part of the crisis,
you got a lot of people involved.

A lot of emotions technology,
of course, has its own problems.

Again, I'm familiar in the last few
months with several crediting and

either victims of cyber attacks.

Or ransomware attacks, and there's no
way they would talk to somebody like you

or I to help them with technology part.

But at least we can help get
them through the member relations

and the communications needs.

That's what's, that's what
you and I are talking about.

In terms of the tech stuff, boy,
dealing with Capitol Hill and the

administration, you can tell that
it's a priority of everybody to

realize just how serious this is.

As much as the good actors keep trying
to keep up with things, the bad actors

seem to be always a half step ahead.

Yeah, the situations keep coming.

You talked about the emotional side.

You're going to have members
that, that are crying.

You're going to have members that
are screaming, you're going to have,

you're going to have people that need
more money in a ransomware situation

than you might be able to give them.

That's just the importance of having
that empathy and being able to listen.

I remember when the corporate crisis
happened and we had conserved US

Central and WestCorp and Scott Hunt
of the agency was still at the agency.

Now he's the director of one.

Scott Hunt and I were out at WestCorp.

And the agency had taken over the West
Corp and there were capital holders there.

The capital was depleted and we
needed to have a communication

plan to call them and say, Hey,
we've taken the credit union over.

We need you to keep your deposits in here.

Cause if you pull them, we're going to
have to sell the underlying deposits.

By the way, you also have to write,
you have to write your capital off,

but you need to keep your money in.

Or your losses are going to be permanent.

If you work with us, we can
hold these more to maturity.

They're going to regain
their value, hopefully.

And you might get some
of your capital back.

Lo and behold, they got
most of their capital.

If not all of their capital
back, it took a while.

But that day I remember when Scott and I
split up the list and it was like heavy

sides, boy, this is going to be a fun day.

And I had, we had people yelling at us.

We had people talking about how they
couldn't handle it, but we, they

needed to know And we needed to get
them through a few stages of grief

so that they could understand it.

But there were also people on that
call that cheered me up saying, gosh,

I'm glad I don't have your job today
because I know it's a tough one.

So their empathy goes both ways.

Yes, it does.

And giving the giving out the vibe
that look, it's a tough situation,

but we've got it under control.

We know what we're doing.

Send it out that kind of reassurance.

I just touched upon something
I remember quite vividly.

It was a painful moment
during the crisis because.

One of the lead presidents who I'd
known and loved and respected for a

long time, but during the crisis, he
was like, let these corporates all fail.

Don't touch my, my members,
my, my natural person credit.

Let these institutions fail.

It's not the problem of the, uh,
the natural person crediting.

And our response, I remember myself
and our general counsel at the

time, the late, great Bob Spenner.

And 1, maybe you were involved in this
too, but we were like, if you let these

institutions fail and blow that kind
of a hole in the share insurance bond,

it is going to affect, it's going to
trickle down and affect all credit unions.

You don't want that.

You want to try to stay big picture.

You want to try to stay focused.

We'll get through this, but don't panic.

And if you're accrediting and talking to
your members during a, or a ransomware

attack, you have to convey that same
sense that, look, we're going to, we're

federally insured, the money's safe,
let's make sure we get through this.

That covers 99 percent of the people who
they know their life savings if they're

at that, they keep everything at that one
credit union, they know that it's going

to be safe when the dust settles, things
get back to normal, and that communication

from the top, setting the tone from the
top, providing the comfort when people are

asking those questions is so important.

Great.

That's right.

John, any last things I, anything
I should have asked you related to

crisis communication today as we, as we
chat here on a, what is it, a Monday?

Yeah.

But we're talking mostly about events
that are most, that are tech driven

cyber breach, the ransomware breach.

I guess we could discuss a little
bit about the, the pandemic was

a whole different breed of cat.

But again, the basics are still the
same in both types of situations.

Tell people the truth.

Be quick about it.

I quoted Omar Bradley and Patrick
Swayze Young and also quote John

Wooden, the basketball coach.

I love this quote.

You go, I love it.

Go for it.

Go for it.

What he said, be quick, but don't hurry.

Is that the 1 you're thinking of?

Yeah, that's the 1 just
want to you want to get up.

And again, make sure you know
who you need to communicate.

In what with in what order it's
all important dealing with the

actual outside media is essential.

I got an anecdote related
to me just a week ago about.

A credit union that just refused
to talk about the major to talk.

They refuse to talk to the
major newspaper in their market.

And your point earlier about
how you create a vacuum.

Somebody else is going to fill it.

It's probably not going
to be to your liking.

So make sure you communicate.

What you want to know what you want
to tell them to the right audiences.

Great point.

Great point.

You reminded me of one last war story
from when we were on at Westcore.

So we were worried about the press and
there was a little bit of press that was

happening and then we were looking out
the window and we thought the place was

closed and I think we thought we saw a
news van drive by, but then we had the

TV's on, TV on, and we were sometimes
as we You want to be good and lucky, you

can get some luck and you can be good
at what you do, you can survive usually,

but the octo mom had her eight kids
out on the west, out on the west coast.

So we went from thinking we were
going to be the top story to there

not being any airtime for what might
have been happening at the biggest

conservatorship in the history of N.

C.

U.

A.

So.

A little bit of luck and our
preparation and the credit unions

cooperations, everybody kept their
deposits and everybody was going to

get able to get their capital back.

I'll never forget part of it.

I, I didn't, but we'll have
to keep an optimum and reserve

in case we need that again.

That's right.

Yeah.

He's got it again.

Got to be lucky.

John, this has been fun
catching up with you as always.

If one of my listeners wants to reach
out to chat with you about what we've

talked about here or anything else,
what's the best way for them to reach you?

Try me at my website is, or
my email is john at john.

McKechnie LLC, and I'll spell that
it's M C K E C H N I E L L C dot com.

John at McKechnie LLC dot com.

Phone number is 2 0 2 9 9 7 5 8 1 6.

Would love to hear from folks if you
have any questions or suggestions.

Thank you.

Very good, John.

And I'll put in the show notes,
I'll put that contact information.

I want to appreciate you being
able to be available to chat on

such short notice here today.

Thank you.

Well, and to do it, this is an important
topic, especially given the times.

You got it.

You got it.

And listeners, I want to thank
you for listening as always.

I hope you'll listen to it again soon.

This is Mark Treichel signing out.

for joining us on this episode of
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