Navy Federal Credit Union - not so different from banks

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Grt2bOutdoors
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Navy Federal Credit Union - not so different from banks

Post by Grt2bOutdoors » Wed Oct 12, 2016 9:08 am

Seems like the largest credit union in the nation got caught taking a page from the banks: making threatening phone calls, unreasonable demands for payment, conduct unbecoming for a military organization, tsk, tsk......... looks like heads should roll over there as well.

http://thehill.com/regulation/finance/3 ... h-28m-fine
Last edited by Grt2bOutdoors on Wed Oct 12, 2016 12:06 pm, edited 1 time in total.
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Re: Credit Unions - not so different from banks

Post by Fclevz » Wed Oct 12, 2016 9:18 am

From the article:
The credit union also blocked the servicemembers from checking their bank accounts online and using their debit cards until they paid their bills, according to the CFPB.
Dang, I was just looking for a new bank/credit union, and this one was at the top of the list. But blocking access to your money, in any way, means their off my list now.

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Re: Credit Unions - not so different from banks

Post by TeamArgo » Wed Oct 12, 2016 9:52 am

I have belonged to three credit unions over the past 39 years, and I have had mostly very good experiences. BUT, I suppose this just proves there are bad apples in every batch.
I left my last bank in 1977, when they refused me a credit card at the age of 23 because I didn't have a credit history. I closed out my three accounts with them, joined a credit union where I worked (they had just started offering "share draft" checking like accounts back then), and have never looked back.
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Re: Credit Unions - not so different from banks

Post by friar1610 » Wed Oct 12, 2016 10:11 am

Disappointed to hear this. I've been a member of NFCU for almost 50 years and have used it as my primary "bank" for at least 35. I've had several mortgages with them as well. I will say that I've seen a trend in the last 10-15 years toward them being more "corporate". This has improved its offerings and services in many cases but apparently comes with downsides as well.

In the past, NFCU has, during periods of actual or threatened government shutdown, told members that their automatic paycheck deposits would be credited to their accounts on time regardless of whether or not the government checks arrived, so they obviously know how to do the right thing.

Of course, it's never a good idea not to repay loans on time and, like every segment of society, the military has its share of financial deadbeats. Based on reading just this one report, it seems to me they (NFCU) were unnecessarily heavy handed.
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Re: Credit Unions - not so different from banks

Post by Willard » Wed Oct 12, 2016 10:26 am

I have personally started to move away from the bigger banks and stick with cu due to the new power of the fdic

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Re: Credit Unions - not so different from banks

Post by dodecahedron » Wed Oct 12, 2016 10:33 am

Here is coverage from the WaPo:

https://www.washingtonpost.com/news/pow ... ge%2Fstory

Their sanctioned behavior certainly gives me pause and I will not be buying any more Navy Fed CDs unless I am convinced they have amended their practices.

In another thread, it was noted that Navy Fed has recently lowered the rates it is paying on some of its CDs.

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Re: Credit Unions - not so different from banks

Post by dm200 » Wed Oct 12, 2016 10:33 am

I have been a member of Navy Federal Credit Union for 46 years. it is the largest, by far, US credit union.

This news is very disappointing. Just a "guess", but I wonder if certain employee and/or management "incentives" might have "motivated" these procedures and actions.

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Re: Credit Unions - not so different from banks

Post by dm200 » Wed Oct 12, 2016 10:38 am

Willard wrote:I have personally started to move away from the bigger banks and stick with cu due to the new power of the fdic
While I do not disagree with movement away from "bigger banks", what is the "new power of the fdic"? I do not see that the FDIC has, in general, more power over insured banks than the NCUA has over federally insured credit unions. In fact, I believe you could say that NCUA (as federal insurer) has more power over federally insured credit unions.

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Re: Credit Unions - not so different from banks

Post by itstoomuch » Wed Oct 12, 2016 10:39 am

Does any one know how or where we can find the compensation of credit union's officers?
:idea:
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Re: Credit Unions - not so different from banks

Post by dm200 » Wed Oct 12, 2016 10:43 am

itstoomuch wrote:Does any one know how or where we can find the compensation of credit union's officers?
:idea:
Federally chartered credit unions (about 2/3 of US credit unions) do not disclose such information. State chartered credit unions (about 1/3 of US credit unions) must make some such disclosures.

This banking "gadfly" publishes a lot of such anti-credit union information http://creditunionwatch.blogspot.com/20 ... u-ceo.html

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Re: Credit Unions - not so different from banks

Post by Willard » Wed Oct 12, 2016 10:55 am

dm200 wrote:
Willard wrote:I have personally started to move away from the bigger banks and stick with cu due to the new power of the fdic
While I do not disagree with movement away from "bigger banks", what is the "new power of the fdic"? I do not see that the FDIC has, in general, more power over insured banks than the NCUA has over federally insured credit unions. In fact, I believe you could say that NCUA (as federal insurer) has more power over federally insured credit unions.
Power they have if a bank goes under to do a simple bail in i cant get into detail i could get ban so i will keep it at that

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Re: Credit Unions - not so different from banks

Post by Northern Flicker » Wed Oct 12, 2016 10:57 am

I think a better title would have been:

Navy Credit Union - not so different from banks

There are countless credit unions throughout the country that serve the needs of their membership very well.

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Re: Credit Unions - not so different from banks

Post by dm200 » Wed Oct 12, 2016 11:08 am

Willard wrote:
dm200 wrote:
Willard wrote:I have personally started to move away from the bigger banks and stick with cu due to the new power of the fdic
While I do not disagree with movement away from "bigger banks", what is the "new power of the fdic"? I do not see that the FDIC has, in general, more power over insured banks than the NCUA has over federally insured credit unions. In fact, I believe you could say that NCUA (as federal insurer) has more power over federally insured credit unions.
Power they have if a bank goes under to do a simple bail in i cant get into detail i could get ban so i will keep it at that
If you cannot back your statement about the FDIC and insured banks, I will stand by my statement that the NCUA has (and exerts) considerable power and pressure on insured credit unions - ESPECIALLY federally chartered ones.

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Re: Credit Unions - not so different from banks

Post by Willard » Wed Oct 12, 2016 11:13 am

dm200 wrote:
Willard wrote:
dm200 wrote:
Willard wrote:I have personally started to move away from the bigger banks and stick with cu due to the new power of the fdic
While I do not disagree with movement away from "bigger banks", what is the "new power of the fdic"? I do not see that the FDIC has, in general, more power over insured banks than the NCUA has over federally insured credit unions. In fact, I believe you could say that NCUA (as federal insurer) has more power over federally insured credit unions.
Power they have if a bank goes under to do a simple bail in i cant get into detail i could get ban so i will keep it at that
If you cannot back your statement about the FDIC and insured banks, I will stand by my statement that the NCUA has (and exerts) considerable power and pressure on insured credit unions - ESPECIALLY federally chartered ones.
Under the dodd frank act which gave power to the fdic in the time of a bail in to take money from depositors accounts that all i will say and let you think what you wish like i said i dont want to get ban from forum

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Re: Credit Unions - not so different from banks

Post by dm200 » Wed Oct 12, 2016 12:13 pm

Willard wrote:
dm200 wrote:
Willard wrote:
dm200 wrote:
Willard wrote:I have personally started to move away from the bigger banks and stick with cu due to the new power of the fdic
While I do not disagree with movement away from "bigger banks", what is the "new power of the fdic"? I do not see that the FDIC has, in general, more power over insured banks than the NCUA has over federally insured credit unions. In fact, I believe you could say that NCUA (as federal insurer) has more power over federally insured credit unions.
Power they have if a bank goes under to do a simple bail in i cant get into detail i could get ban so i will keep it at that
If you cannot back your statement about the FDIC and insured banks, I will stand by my statement that the NCUA has (and exerts) considerable power and pressure on insured credit unions - ESPECIALLY federally chartered ones.
Under the dodd frank act which gave power to the fdic in the time of a bail in to take money from depositors accounts that all i will say and let you think what you wish like i said i dont want to get ban from forum
Citing provisions of current law (Dodd Frank IS current law) is completely within the allowable topics on this forum. What would be "banned" is a "conspiracy theory" about what the FDIC might do. Could you cite the provision of Dodd Frank that gives the FDIC the power to "take money from depositors accounts"? Since you refuse to cite provisions of law (allowable), I can only assume there are no such provisions (as you state and interpret).

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Re: Credit Unions - not so different from banks

Post by Willard » Wed Oct 12, 2016 12:27 pm

dm200 wrote:
Willard wrote:
dm200 wrote:
Willard wrote:
dm200 wrote: While I do not disagree with movement away from "bigger banks", what is the "new power of the fdic"? I do not see that the FDIC has, in general, more power over insured banks than the NCUA has over federally insured credit unions. In fact, I believe you could say that NCUA (as federal insurer) has more power over federally insured credit unions.
Power they have if a bank goes under to do a simple bail in i cant get into detail i could get ban so i will keep it at that
If you cannot back your statement about the FDIC and insured banks, I will stand by my statement that the NCUA has (and exerts) considerable power and pressure on insured credit unions - ESPECIALLY federally chartered ones.
Under the dodd frank act which gave power to the fdic in the time of a bail in to take money from depositors accounts that all i will say and let you think what you wish like i said i dont want to get ban from forum
Citing provisions of current law (Dodd Frank IS current law) is completely within the allowable topics on this forum. What would be "banned" is a "conspiracy theory" about what the FDIC might do. Could you cite the provision of Dodd Frank that gives the FDIC the power to "take money from depositors accounts"? Since you refuse to cite provisions of law (allowable), I can only assume there are no such provisions (as you state and interpret).
Dodd-Frank: Title II - Orderly Liquidation Authority

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Re: Credit Unions - not so different from banks

Post by MindBogler » Wed Oct 12, 2016 4:03 pm

dm200 wrote:Since you refuse to cite provisions of law (allowable), I can only assume there are no such provisions (as you state and interpret).
There are so many things wrong with this logic, I don't even know where to begin. :confused

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Wed Oct 12, 2016 5:42 pm

Dodd-Frank: Title II - Orderly Liquidation Authority
This cited section appears to apply to non-banks - not FDIC insured banks.

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Re: Navy Federal Credit Union - not so different from banks

Post by MindBogler » Wed Oct 12, 2016 6:22 pm

dm200 wrote:This cited section appears to apply to non-banks - not FDIC insured banks.
Disclaimer: I don't know if Willard's assertion regarding deposits is correct. I bank at a CU so I don't even want to investigate (the claim).

However, upon a cursory glance of the Dodd-Frank Title II, it applies nebulously to "large financial institutions" so I disagree with your claim that it does not apply to banking institutions. It gives the FDIC additional authority over brokerages, insurance companies or anything that could be classified as a "financial institution" if it presents a "systemic" risk to the financial system. By my reading, banks such as BofA, Wells Fargo, et al. certainly could be considered under this provision.

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Re: Navy Federal Credit Union - not so different from banks

Post by Willard » Wed Oct 12, 2016 6:39 pm

dm200 wrote:
Dodd-Frank: Title II - Orderly Liquidation Authority
This cited section appears to apply to non-banks - not FDIC insured banks.
FDIC in a crisis wouldn't have enough to cover
Everyone's account since they have about 73 billion. Simply why I wouldn't bank with FDIC I would stick with cu typically don't leverage themselves like major banks just my view hopefully someone else can agree. I just hope a bank crisis never happens.

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Re: Navy Federal Credit Union - not so different from banks

Post by mw1739 » Wed Oct 12, 2016 7:00 pm

Willard wrote:
dm200 wrote:
Dodd-Frank: Title II - Orderly Liquidation Authority
This cited section appears to apply to non-banks - not FDIC insured banks.
FDIC in a crisis wouldn't have enough to cover
Everyone's account since they have about 73 billion. Simply why I wouldn't bank with FDIC I would stick with cu typically don't leverage themselves like major banks just my view hopefully someone else can agree. I just hope a bank crisis never happens.
The FDIC (just like the NCUA) is backed by the full faith and credit of the US government i.e. they have a bottomless checking account. The system worked ideally in the Great Recession and no insured depositor lost a dime.

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Re: Navy Federal Credit Union - not so different from banks

Post by Willard » Wed Oct 12, 2016 7:04 pm

I do understand some cu are FDIC some are not

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Wed Oct 12, 2016 7:40 pm

Willard wrote:I do understand some cu are FDIC some are not
That is not how FDIC, federal insurance and credit unions work at all.

The FDIC backs ONLY banks (commercial banks, savings banks, etc.) FDIC insured banks back customer deposits to at least $250,000 (backed by the full faith and credit of the US Government). There are severaly ways this $250,000 can be multiplied for individuals, couples, etc.

The FDIC does not, and never has, backed credit unions.

Almost all (about 6,800 of the approximately 7,000) US credit unions are insured by the NCUA Share Insurance fund, run by the National Credit Union Administration (NCUA), a US federal government agency. NCUA insured credit unions have the SAME backing of the full faith and credit of the US government as FDIC insured bank. The rules and calculations for NCUA insured savings are the same as the rules for FDIC insured bank deposits. [From time to time, when there are changes to such rules, it may happen that there is a slight lag from FDIC to NCUA].

About 2/3 of US credit unions are federally chartered and ALL federally chartered credit unions are NCUA insured. About 1/3 of US credit unions are state chartered. Any state chartered credit union can choose to be federally insured by NCUA and in all but 9 states, all state charters must have NCUA insurance. In 9 states, state chartered credit unions may choose "private" insurance. There are about 200 privately insured credit unions. A state chartered credit union in one of those 9 states can convert from NCUA federal insurance to private insurance or from private insurance to NCUA. All members must receive notice of such a conversion and may have the right to withdraw funds peior to such a conversion from NCUA to private insurance.

FDIC insured banks pay the FDIC for the federal insurance backing and NCUA insured credit unions pay NCUA for the federal backing. Without getting deep into the weeds of such "funding", the NCUA and the FDIC have different (statutory) methods of assessing insured banks or credit unions and a different funding/accounting methodology. While it can be debated with method is "better", both methods (in my opinion) provide adequate funding and management of "risk".

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Wed Oct 12, 2016 7:47 pm

I would stick with cu typically don't leverage themselves like major banks just my view hopefully someone else can agree. I just hope a bank crisis never happens.
The NCUA share insurance fund has about 1.3% of the total insured balances of insured shares (deposits) in federally insured credit unions. This is a simiar "ratio" to the FDIC insurance fund and insured depisits at FDIC insured banks. I cannot agree with your statement because (a best I understand) it is just simply not true.

There are, I believe, many justifiable reasons to stay away from big banks and use credit unions. The ratio of the federal insurance fund to insured deposits is NOT one of them.

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Re: Navy Federal Credit Union - not so different from banks

Post by corpgator » Wed Oct 12, 2016 8:11 pm

I've been a member for about 15 years now and never realized they were the largest CU in the US. You wouldn't know it from how far dated their website is.

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Re: Navy Federal Credit Union - not so different from banks

Post by Willard » Wed Oct 12, 2016 9:20 pm

dm200 wrote:
I would stick with cu typically don't leverage themselves like major banks just my view hopefully someone else can agree. I just hope a bank crisis never happens.
The NCUA share insurance fund has about 1.3% of the total insured balances of insured shares (deposits) in federally insured credit unions. This is a simiar "ratio" to the FDIC insurance fund and insured depisits at FDIC insured banks. I cannot agree with your statement because (a best I understand) it is just simply not true.

There are, I believe, many justifiable reasons to stay away from big banks and use credit unions. The ratio of the federal insurance fund to insured deposits is NOT one of them.

A institution with 50 billion in assest is put under federal review so thats how some banks fall under the Dodd-Frank Tittle ll
If you take derivatives into account all major banks are leverage really high even nfcu is 15:1 that was in 2013. I am sure its even more now sorry i dont have the current number
I myself bank with two banks all i am trying to say i would stick with cu compared to big banks
Anyhow that my thought i am sure i over think stuff but hey better safe then sorry

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Re: Navy Federal Credit Union - not so different from banks

Post by Waba » Wed Oct 12, 2016 11:05 pm

The key takeaway here, more than anything else, is to ensure you stay within the FDIC and/or NCUA insured limits per financial institute.

For the latest data on bank failures: http://www.calculatedriskblog.com/2016/ ... -bank.html

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Re: Navy Federal Credit Union - not so different from banks

Post by gmtret » Thu Oct 13, 2016 2:29 am

I have been a member of Navy Federal since the seventies and I find this to be disheartening, to say the least. At the same time I will continue using NFCU as my primary bank because if they ever loan me money I will surely pay them back. It is the people who don't pay their bills that I have a problem with ...

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Re: Navy Federal Credit Union - not so different from banks

Post by Frugal Al » Thu Oct 13, 2016 3:57 am

Maybe there is more to it, but it seems like NFCU got railroaded on this one--nothing so egregious as to warrant the hefty fine. In the old days it was common place for a creditor to contact one's commanding officer for failure to pay. Apparently that's not the case anymore. I think the CFPB is a bit heavy handed in some instances.

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Re: Navy Federal Credit Union - not so different from banks

Post by smalltown » Thu Oct 13, 2016 5:11 am

Is the NFCU owned fully by the members?

If so, then, indirectly, the members are being fined for the management's behavior?

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 7:16 am

Willard wrote:
dm200 wrote:
I would stick with cu typically don't leverage themselves like major banks just my view hopefully someone else can agree. I just hope a bank crisis never happens.
The NCUA share insurance fund has about 1.3% of the total insured balances of insured shares (deposits) in federally insured credit unions. This is a simiar "ratio" to the FDIC insurance fund and insured depisits at FDIC insured banks. I cannot agree with your statement because (a best I understand) it is just simply not true.
There are, I believe, many justifiable reasons to stay away from big banks and use credit unions. The ratio of the federal insurance fund to insured deposits is NOT one of them.
A institution with 50 billion in assest is put under federal review so thats how some banks fall under the Dodd-Frank Tittle ll
If you take derivatives into account all major banks are leverage really high even nfcu is 15:1 that was in 2013. I am sure its even more now sorry i dont have the current number
I myself bank with two banks all i am trying to say i would stick with cu compared to big banks
Anyhow that my thought i am sure i over think stuff but hey better safe then sorry
The CFPB, by statute, has direct jurisdiction over only about the 4 largets U credit unions. It is based on an asset size threshhold. While subject to the same rules/regs, etc., the rest of the US credit unions are examined for these issues by NCUA and/or state regulators, as applicable.

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 7:27 am

Frugal Al wrote:Maybe there is more to it, but it seems like NFCU got railroaded on this one--nothing so egregious as to warrant the hefty fine. In the old days it was common place for a creditor to contact one's commanding officer for failure to pay. Apparently that's not the case anymore. I think the CFPB is a bit heavy handed in some instances.
Yes, this was common. Either fortunately or unfortunately (depending on your point of view), doing this is no longer allowed. While it does not surprise me that there might have been occasional violations as cited by the CFPB, it does surprise me how (allegedly) widespread the violations appear to have been. These cited violations are all very, very basic types of things that even the entry level compliance person (or someone trained in compliance) would know. I personally know some of the compliance folks at Navy Federal and I am 100% sure all of their large compliance staff would never agree that these actions are OK. It sure looks like something in the process broke down.

My "guess" is that (much like Wells Fargo) commissions, pay raises, bonuses, promotions, etc. to meet goals and targets played a role - and that following the rules did not seem to be of financial and career benefit.

In the last few years, Navy Federal has greatly expanded its field of membership into all of DoD. I also have heard that it has become very aggressive in expanding over all branches of the military.

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 7:28 am

smalltown wrote:Is the NFCU owned fully by the members?
If so, then, indirectly, the members are being fined for the management's behavior?
Yes and Yes. Very similar (although not identical) to stockholders of a corporation when the corporation is fined.

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Re: Navy Federal Credit Union - not so different from banks

Post by Willard » Thu Oct 13, 2016 8:49 am

In my view the FDIC backing accounts up to 250,000 is false due to if more then one major bank goes under the FDIC will have a hard time.
I do realize FDIC can take a line of credit up to 500 billion that's about its. Bail outs are not allowed due to new law dodd-frank act. If you look back at the 2008-09 crisis was handle with bail-outs, if repeated wouldn't happen next time around (no more bail out). Why i said earlier i am moving away from any major bank. That's my 2 cents and i hope we never have a crisis again and bail-in doesn't happen.

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 9:23 am

Willard wrote:In my view the FDIC backing accounts up to 250,000 is false due to if more then one major bank goes under the FDIC will have a hard time.
I do realize FDIC can take a line of credit up to 500 billion that's about its. Bail outs are not allowed due to new law dodd-frank act. If you look back at the 2008-09 crisis was handle with bail-outs, if repeated wouldn't happen next time around (no more bail out). Why i said earlier i am moving away from any major bank. That's my 2 cents and i hope we never have a crisis again and bail-in doesn't happen.
It is not false at all. You seem to have great difficulty in understanding FDIC and NCUA federal insurance. There are many factors here.

One factor is that, usually at least, when a bank fails, and the FDIC has to pay depositors, only a portion of the failed bank assets are lost. The FDIC can (and does) increase the amounts banks have to pay, in order to replenish the insurance fund. $500 BILLION is a lot of money.

While I do not disagree with moving away from major big banks, you should not post false and misleading information here.

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Re: Navy Federal Credit Union - not so different from banks

Post by Willard » Thu Oct 13, 2016 10:15 am

If you would look at the top 30 major banks there liabilities far pass what the FDIC can cover that is all i am pointing out. As a depositor you are unsecured debt. I am talking worst case believe what you wish and say i am wrong as i said i hope we never have to find this out.
Dodd-Frank, Title II, Sec. 209 (b):

if claims are made against a firm, they will be paid in this order:

administrative costs
the government
wages, salaries, or commissions of employees
contributions to employee benefit plans
any other general or senior liability of the company
any junior obligation
salaries of executives and directors of the company; and
obligations to shareholders, members, general partners, and other equity holders

A bank with 50 billion and more

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Re: Navy Federal Credit Union - not so different from banks

Post by tomd37 » Thu Oct 13, 2016 10:24 am

I think most people are getting off topic here. The original post refers to the $28.5M fine the NFCU was hit with. As a 55-year member of NFCU (since 1961) I am totally disgusted with the leadership and the cost to members as a result of this fine. :annoyed
Tom D.

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Re: Navy Federal Credit Union - not so different from banks

Post by mikestorm » Thu Oct 13, 2016 10:32 am

dm200 wrote:
smalltown wrote:Is the NFCU owned fully by the members?
If so, then, indirectly, the members are being fined for the management's behavior?
Yes and Yes. Very similar (although not identical) to stockholders of a corporation when the corporation is fined.
This (potential) conflict of interest between senior management and an organization's ownership class is exactly why clawback provisions exist. If it is determined that the impetus of this behavior is an incentive plan gone wrong, that essentially represents a 'smoking gun' that senior management was engaged in this behavior for their own self interest and (due to the fine) at the direct detriment to the owning class.

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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 10:39 am

tomd37 wrote:I think most people are getting off topic here. The original post refers to the $28.5M fine the NFCU was hit with. As a 55-year member of NFCU (since 1961) I am totally disgusted with the leadership and the cost to members as a result of this fine. :annoyed
So am I (Navy FCU member since May of 1970). Even more significant (in my opinion) is the damage to the reputation of Navy Federal AND credit unions, in general). I am near certain that Navy Federal will keep all the inside misconduct "secret", but I wonder how up the chain of command these abuses reach. If/when anything gets out, I strongly believe that motivation for bonuses (at multiple management levels), promotions, commissions, and related are responsible for these improper actions. From what has been published, these violations are very basic types of things that should not be done. Surely, staff received "compliance training".

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Re: Navy Federal Credit Union - not so different from banks

Post by Grt2bOutdoors » Thu Oct 13, 2016 10:43 am

tomd37 wrote:I think most people are getting off topic here. The original post refers to the $28.5M fine the NFCU was hit with. As a 55-year member of NFCU (since 1961) I am totally disgusted with the leadership and the cost to members as a result of this fine. :annoyed
+1 - Agree, posters should stay on topic or I will request to have it locked.
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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 10:46 am

mikestorm wrote:
dm200 wrote:
smalltown wrote:Is the NFCU owned fully by the members?
If so, then, indirectly, the members are being fined for the management's behavior?
Yes and Yes. Very similar (although not identical) to stockholders of a corporation when the corporation is fined.
This (potential) conflict of interest between senior management and an organization's ownership class is exactly why clawback provisions exist. If it is determined that the impetus of this behavior is an incentive plan gone wrong, that essentially represents a 'smoking gun' that senior management was engaged in this behavior for their own self interest and (due to the fine) at the direct detriment to the owning class.
In almost any kind of incentive based compensation, there is usually the possibility of improper actions to achieve the results that yield more money. Those involved in collections, for example, may be incentivized to be more successful in collecting past due obligations. That makes a lot of sense. There, however, need to be controls and other restraints that the line of improper methods not be allowed. This is true whether or not such methods (deemed improper) make sense, are stupid, unfair, etc. I also have to believe that, if true, such widespread violations cannot be the result of a few "rogue" employees.

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Re: Navy Federal Credit Union - not so different from banks

Post by dodecahedron » Thu Oct 13, 2016 10:48 am

tomd37 wrote:I think most people are getting off topic here. The original post refers to the $28.5M fine the NFCU was hit with. As a 55-year member of NFCU (since 1961) I am totally disgusted with the leadership and the cost to members as a result of this fine. :annoyed
I agree that much of the above is off topic.

I am disturbed by these practices, but I don't see any immediate cost to members. My Navy Fed CDs are still paying their contractual rate and they retain their NCUA coverage. Although they have dropped the rates on some of the new CDs, that matters little to me. I won't be buying any more until such time as NCUA demonstrates they have taken steps to improve their practices.

In possible partial defense of Navy Fed, at least one of their sanctioned activities (cutting off electronic access to accounts for members who are in default on their loan obligations) was (and still is) believed to be a legal policy by the credit union industry generally. There was no explicit regulatory prohibition on the books against this practice at the time Navy Fed did this, and it is still apparently common practice in the industry, according to the general counsel of the NYS Credit Union Association.

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Re: Navy Federal Credit Union - not so different from banks

Post by Ervin » Thu Oct 13, 2016 10:54 am

Don't confuse FCUs with small CUs. The former are essentially big corporations, so it's normal that people don't come first. The more branches a credit union has, the less I like it.
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Re: Navy Federal Credit Union - not so different from banks

Post by itstoomuch » Thu Oct 13, 2016 11:36 am

JMO
CU's are owned by its members. However, they may not be as transparent as stock companies.
They may be some advantages for being a CU member but me, it is hard to quantify:

I am a member of 2 CUs and do most of my banking at the CU.
CreditCard interest is 7.x% at CU vs Chase @26.x%.
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Re: Navy Federal Credit Union - not so different from banks

Post by dm200 » Thu Oct 13, 2016 12:49 pm

Ervin wrote:Don't confuse FCUs with small CUs. The former are essentially big corporations, so it's normal that people don't come first. The more branches a credit union has, the less I like it.
To clarify, if you mean "FCU" to mean "Federal Credit Union", the statement is very misleading. About 2/3 of US credit unions (from the largest NAVY Federal to small credit unions under $1 Million assets). About 1/3 of US credit unions are state chartered, including several of the largest ones in the country.

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Re: Navy Federal Credit Union - not so different from banks

Post by prudent » Thu Oct 13, 2016 1:04 pm

Topic has been exhausted, not staying on-topic, and is locked.

Locked