Credit Union Exam Solutions Presents With Flying Colors

Hey everyone, this is Mark Treichel
with a very short podcast episode

for this week, and I'll explain
why a lot going on in the world.

I just want to touch on a few
hot topics, but I watched duke.

Collapse against Houston on Saturday.

Still a big college basketball fan
when it comes down to the Sweet 16,

the final four in particular, and
that reminded me of an old 30 for 30.

Episode called, I Hate Christian
Layner from back when the

hatred of Duke and sports.

It's kinda people love to hate
dynasties, the Red Sox, the Yankees,

the Dodgers, et cetera, et cetera.

And the fact that Duke had this
epic collapse had a lot of the

people that liked basketball.

Glad to see that Duke
can't buy a championship.

So that was going on this weekend.

Another thing that
happens this time of year.

It seems like in every family
there's one person who gets to help

everybody in the family with taxes.

And April 15th is coming up and so
I've been spending a little bit of

time helping various folks in my
family do some tax planning, doing

a little bit for myself as well.

And so as a result I typically might
have a podcast or two in the queue

that I can get ready for Tuesday's
release, but I don't have that here.

And with that I, there's a lot
of other things going on that I'm

just gonna touch on real quickly.

I saw a really cool post on x or
Twitter, or whatever you want to call it.

That someone alerted me to,
let me see if I can find it.

And it relates to former NCUA
Board Chair Rodney Hood, who is

currently acting head of the OCC.

And what was put out on.

The Twitter by a gentleman
named Ryan Tracy.

Is that part of our dive
into the FDIC race tonight?

The jocking between two
acting agency leaders.

Leaders are said to be
interested in the FDIC chair.

Occs, Rodney Hood has been
trotting out policy changes.

Rapid fire.

And some Travis Hill supporters
perceive a bit of front running.

Let's see.

First mover in early March, officials
from Treasury OCC and FDIC were discussing

steps to give banks more leeway to
engage with digital assets according

to a person familiar with the talks.

This issue is a top
priority and GOP priority.

After the Biden administration's Draconian
tactics led many banks to cut or avoid

relationships with crypto businesses.

This is not my opinion, this is
something off of x ahead of the

White House Summit on March 7th.

The person familiar says the
administration asked the two banking

agencies to hold off on announcing
anything because it was considering

an executive order on the topic.

The OCC, however, issued a press release
on the day of the event touting its

reaffirmation that crypto activities are
permissible in the federal banking system.

Some officials, including at
treasury, felt frustrated that

the OCC had jumped the gun.

This person says the planned
executive orders never came, and

two and a half weeks later, the
FDIC detailed similar changes.

So OCC got it a little bit ahead of it.

But there's some conjecture out there
that Rodney Hood could be in line for

an official seat as at the FDIC and pre,
presumably that would mean as the chair.

It's good he knows credit unions.

It's just very interesting.

I, Rodney had two terms at NCOA,
spent a lot of time with him

in both those terms and his.

Passion for life.

His excitement, his energy is
unmatched by anyone I've ever

spent that much time with.

So that I think would be a positive
things in the financial arena.

And very interesting.

The second thing is Jim Ssel
announced his retirement.

He did not.

From America's credit unions, he did
not pick a date because he doesn't

wanna lose focus from all the important
things that are out there as far as

not getting regulators combined and
not getting credit unions taxed.

I had heard a rumor that this was out
there during GAC but he didn't want that

announcement to be made at GAC, that
the people in the know knew that this

was coming, but they didn't want that to
steal the thunder of the importance of.

Staying focused on the issues at hand,
which are maintaining autonomy of NCUA

and maintaining tax exempt status.

But it'll be very interesting
to see how that plays out.

Will it be somebody at at America's
credit unions that takes over,

will they go get a heavy hitter
former senator or what have you.

So that'll be fun to watch as well.

And here we sit.

I'm recording this on Monday.

What the seventh of April the
markets took a beating last week.

I heard some folks and saw
some folks on LinkedIn talking

about the flight to quality.

And remember your credit unions
during a flight to quality, which

can be a good thing, but it can also
dip your capital ratios if you find

yourself close to some triggers.

Whether that's the leverage
ratio for risk-based capital or

whether that's well capitalized.

You're trying to stay out of needing to
file re earnings retentions, or whether

you're filing earnings retentions and
you're, you don't want big growth.

That could trigger you to have a capital
net worth restoration plan if you're on

the cusp of one of those breaking points.

A flight to quality could be a little
bit of havoc, but net I think that

would be a good thing for credit unions.

Two other things I, no, a
couple, three other things.

NCA has offered their buyouts to
their staff from what I understand.

Having talked to some folks that
are contemplating doing doing

what was offered I think they're.

Is quite a different bit of
predictions on what might happen here.

The numbers that hopefully
people are hoping will happen

versus what will happen.

The reality is when you offer those,
the people that take them are the

ones who were always going to retire.

Because if you offer somebody
$50,000 to retire early.

But they didn't want to.

They have to go find
other employment $50,000.

We'll buy you a Toyota Camry.

Not much more.

And the reality is I don't think
those things are going to entice

anybody other than those folks that
were already thinking about retiring.

But when there is a big.

Increase in retirements at NCA,
that's gonna make your exams a

little bit tougher because odds are
they'll lose more experienced people

as opposed to less experienced.

That'll create opportunities
for those down the line.

But as as well as I, things
are slow at NCA exam wise.

This will just make them slower.

This will make bank.

Acquisition slower.

This will make merger applications
slower, et cetera, et cetera.

So short term, there should
be some pain around this.

With the goal of.

Theoretically saving some money,
but the purge of the corporate

knowledge, I think will be worse
than the saving of the money.

'cause the money will be spent
next year or the year after anyway.

So I think as much to do about
nothing as far as actually having

net gains from these changes.

But it does show that they're making
efforts to comply with what Trump wants.

The Trump administration that is.

I've talked a lot here about Kyle Hutman
only having one Republican vote, and that

there are two Ds that control the swing.

The reality is Todd Harper
basically is the swing vote.

He has a lot of clout because of
his understanding of having been

at NCUA for so long and if there
are going to be two to one votes

instead of three to zero votes.

Todd, is he's.

He is left, but there are, he
understands the concept of being

in the middle and getting things.

So I think he's gonna be if you
like to watch Survivor, he's the

swing vote in survival Survivor.

Sometimes you have three different
tribes that come together and you got

two people that came from this tribe,
two people that came from this tribe,

and there's one that's in the middle
and that's the person they're lobbying.

In this instance, the person, that
I believe Hartman goes to is Harper.

And whatever deals get done will
be that and only deals will get

done that Harper wants to get done.

So while he's no longer chair,
he still has in my opinion, the

most powerful seat of the three.

Lastly, I think I wanna touch on
leveraging as it relates to sub debt.

NCA sometimes gets their.

Gets wrapped around the axle on leveraging
of a balance sheet with subordinated debt.

In my opinion, if you are a code one or
a code two, you should automatically get

subordinated debt if you apply for it.

If you're a code three, and it can reduce
the risk of the insurance fund, you

should automatically get approved for it.

And sometimes NCA views this
word of leverage as being bad.

Here's the reality in my mind.

You have your reserves which are
your reserves, which you own.

Every other source of deposit is
leveraged, whether it's shares, whether

it's share certificates, whether it's
money markets, whether it's brokered

CDs, whether it's borrowings at the
Federal Home Loan Bank, or whether it's

subordinated debt, which reduces the risk
to the fund because that subordinated debt

takes the first loss in any loss scenario.

I struggle to see why NCUA is
in my mind far too restrictive.

When applications come in for
subordinated debt, to me, subordinated

debt the belief should be that it's
gonna be approved unless there's

something material that should stop it.

And that's just not the reality
in some places in the agency.

And there has been progress
made since long ago.

But.

Since rates have gone up, I've seen
some weird queries and some weird

questions at NCUA that I just hope
that that discussions by the credit

unions or reapplications can lead to
some better decisions in that arena.

I think that's pretty much it.

The baseball season is off and running.

My twins are are again, not doing well.

It's close to NBA basketball season.

I'm hopefully hoping the Timberwolves can
get the sixth slot in the west or higher.

And again just a few hot
topics on credit unions.

I'll be back with a more
detailed podcast next Tuesday.

And let's see.

Tonight we've got Houston and
Florida in the championship.

By the time this runs tomorrow, one
of those two have will have one.

I'm rooting for Houston because
of the connection to Phi Slam

Jama Kim, Juan Clyde Drexler.

And a few other NBA stars
from back in the eighties that

never got their championship.

Let's, here's to hoping that
Houston can get their first

national championship tonight.

This is Mark reel signing
off with flying colors.

I hope you'll join me again next week.