You want to be quick. You don't want to you don't want to rush anything, but make sure you get out there and tell people what they need to know. Hey everyone, this is Mark with a special Archive episode of With Flying Colors. I hope you enjoy. Do you want to maximize your success with NCUA? Join Mark Treichel as he shares with you the insider's view on passing your exam with Flying Colors. The With Flying Colors podcast is sponsored by Credit Union Exam Solutions by Mark Treichel.
If you would like to work directly with the Credit Union Exam Solutions team and receive support to optimize NCUA so you save time and money, Visit us at marctreichel. com to find out more. 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 With Flying Colors, subscribe on your favorite podcast app to hear future episodes where subject matter experts of all varieties will provide tips on how to achieve success with NCUA. If you would like to learn more about how we assist credit unions, check out our services at marktreichel. com.