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A recent post on the allegations by FinCEN director Jennifer Shasky Calvery that credit unions are lackadaisical about filing suspicious activity reports led not only to noisy "un-subscriptions" to this blog by some apparently offended credit union readers (usually, only a post bashing Elizabeth Warren causes that reaction), but an actual thoughtful and civil response from long-time credit union attorney Hal Scoggins. Mr. Scoggins failure to adopt the usual "shoot-the-messenger" approach to blog reading marks him as a man of taste and discrimination, as does, obviously, his interest in reading the deep thoughts of Jack Handy this blog's author, a man who a once received an email from a New York-based think tank that advised him that he could be a "thought leader" if only he weren't so flippant. Dream on!
Hal gave me permission to post his response here, so here it is (edited to remove an favorable comments about me, since I am currently positioning myself as the "Anti-Trump" foretold in the Book of Revelations):
A quick comment on your 9/17 post about Jennifer Shasky Calvery’s comments on CUs that haven’t filed SARs or CTRs. I read her comments and initially thought, “Wow, that’s scary." A “statistically significant” number of credit unions have not filed any SARs or CTRs.” But it’s a little less scary when one considers a couple of points about credit unions:
* The NCUA’s call report data for June 2013 shows that there are 6284 credit unions in the United States.
* The same call report data shows that 1892 of those credit unions have total assets under $10 million. (30% - that’s statistically significant.)
* Average asset size of those 1892 credit unions is just over $4 million.
* Average number of members: 826
* Average number of employees: 1.4 FT and 1.2 PT
I could not pull pure cash data from the NCUA data, but I looked at a couple of random CU’s call reports; one $2.5 million and one $1.5 million. They had cash on hand of $26,000 (yes, thousand) and $15,000, respectively. I would guess that a statistically significant number of those credit unions do not offer checking accounts. Only 287 offer credit cards, and I was shocked the number was that high.
When the CU has only $4 million in total assets, 800 members with an average account balance of about $5000, and there is probably only $40,000 in cash in the entire CU, there are probably not going to be any times where someone is bringing in or taking out $10,000 in cash (no CTRs). Plus, you don’t offer enough services to be that useful for criminal activity, and there are probably not many times where the member is doing a transaction that the credit union doesn’t have enough knowledge about to take it out of the realm of suspicious activity (no SARs). If 30 percent of CUs in the country fit that profile (and it appears they do), it is a lot easier to see how a “statistically significant” number haven’t filed any SARs or CTRs for a couple of years.
Valid points, and they ought to be considered by all fair minded folks without an axe to grind, which, I think, leaves out 99% of commercial bankers and at least one bank law blogger who is more interested in eliciting a drive-by guffaw than being a "thought leader" (whatever the hell that is).
In a later email, Hal made the following additional point, which is also telling.
My reaction now (after doing that tiny bit of research) is – you’re the director of FinCEN, and you can’t have one of your flunkies do 10 minutes of research to provide some context before you make a speech like that? Or better yet, require the flunkie to do 10 minutes of research to provide some context at the time they actually provide you with the info for your little sound bite?
Research? We don't need no stinkin' research! We're the federal "guhment" and we've just been making it up as we go along since 1789.
Besides, Calvery needs food for FinCEN's pet goat and she wants all financial institutions, taxable and tax-free, to get on the stick and start winnowing the forests. SARs: it's what for dinner!
