What the Jets, the SEC, and Credit Unions have in common.

November 27, 2012 at 7:15 am 1 comment

The biggest story in sports over the last couple of days is that Fireman Ed, that famous Jets fan who taught generations of fans how to spell J-E-T-S (after all, Jets fans aren’t too bright otherwise they’d be Giant fans), is hanging up his fireman’s helmet and will no longer lead the cheers at the Jets’ home games.  One of the biggest retirements in finance is that of Mary Shapiro, who will step down as chairwoman of the Securities and Exchange Commission (SEC), a job she has held since 2009.  You may think these two events have nothing in common with each other, let alone credit unions, but you’d be wrong.

First, in 2009 when Shapiro took over at the SEC, the SEC was at dirt bottom.  Despite the fact that almost all the major investment banks and financial products that caused the Great Recession were under the jurisdiction of the SEC, the SEC played absolutely no role in spotting the looming disaster or in managing the crisis.  It needed to be reformed for the sake of the American taxpayer and the American financial system and this was the perfect time to do it.

Also in 2009, like many Jets fans, Fireman Ed thought this was the beginning of a new era.  They hired Rex Ryan, were soon to draft a good, young quarterback, and were moving to a new stadium.

Fast forward to almost four years later.  As an interview in today’s Wall Street Journal makes clear, Shapiro has accomplished almost none of her goals; the Volcker Rule, which stands for the simple proposition that investment banks should be in the business of helping clients and not betting their own money is still not implemented; there still is no clearing house for derivatives and there has been no reform of money markets.  In short, almost all the major reforms that needed to be made to prevent a relapse of the financial crisis have yet to be made.

In the meantime, Jets fans continue to suffer.  Their quarterback is a bust, their coach is a doofus, and they will probably sleep walk through the rest of the season.  Jets fans have to endure all this while paying for seat licenses to get decent seats at their new stadium.  Is it any wonder why Fireman Ed gave up?

I suspect that a lot of credit unions feel like Fireman Ed, as well.  Even though Dodd-Frank has done nothing to prevent a future economic disaster, it has resulted in an onslaught of regulations that will make mortgages more expensive, necessitate shiny new disclosures, and birthed a Consumer Protection Bureau that large banks are best positioned to deal with.  The single biggest failure of the Obama Administration and this Congress isn’t their inability to come to grips with fiscal reality, but their failure to face reality by holding those institutions most responsible for the country’s problems accountable and letting credit unions continue to do what they were doing just fine without more government intervention.

Lake Woebegone Lives

A bank conversion to a credit union is about as uncommon as a Panda giving birth in the National Zoo so I am here to welcome Thrivent Financial for Lutherans of St. Paul, Minnesota.  CUNA points out that this is probably the first such conversion since the mid-1990s.  I think the banks are getting nervous.

Entry filed under: Compliance, Economy, General, Regulatory. Tags: , , , , , .

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1 Comment Add your own

  • 1. Keith Leggett  |  November 27, 2012 at 10:12 am

    Not nervous at all. I think this is how charter choice should take place. This is very different from the star chamber process that NCUA has implemented to block credit union exit to another charter.

    Reply

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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