Hey everyone, this is Mark 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, Mark. Thanks for having me on. How
are your Orioles doing heading into the All Star break? They doing okay?
First place 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. And
my twins are doing okay. They've got a few injuries. Carlos Correa just got plantar fasciitis for the second time in about 12 months, but but other than that, we're trying to track down the Cleveland Indians,
It's the Cleveland Indians. 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 baseball. 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 background as we move on through the years. I worked on Capitol Hill in the late eighties, joined CUNA. And on April fool's day, 1987, which I think a lot of people will 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 chairman, Joanne Johnson, Mike Freisel and Debbie Matz and is 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 at NCOA. That's it. I'm just going to loft that up there. Crisis communications and lessons learned.
So what's your take on how an institution should approach crisis communication and then perhaps any lessons learned relative to that?
It's the obvious starting point, I think, from where you and I intersect was, of course, 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 TV, which is always a bad thing to start a conversation with.
And I turned it on and there was a, an SNL in Los Angeles that was having a run. And you could, CNN had the helicopters flying over this street scene of people lined up around the block and, right away, I knew that if people are seeing that on TV, it's going to send shockwaves 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, credit unions certainly were affected quickly to the point where the liquidity strains in the industry. necessitated NCOA scrambling quite a bit to get the the central liquidity facility upgraded and updated. That, that required a pretty heavy lift on Capitol Hill.
Fortunately, even though the industry wasn't, the credit union trades 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 and put a lot of pressure on everything that happened. And of course, consumers 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 webpage, 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, that the thrift problem started and it just went downhill from there.
So I would say as a first 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 one, two, three, four, and five, 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.
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 there, part of member service is making sure they understand what's going on. And, again be authoritative be truthful, be transparent. These are the kinds 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, this sounds obvious, but keep your head, just realize that you've got a job to do. You know what you're doing.
You're the experts get it done.
And I'm, as you're walking through that, I'm thinking about, again, Credit unions, but I'm thinking about our time at N. C. U. A. And we had at N. C. U. A. And they still do. They have a very robust list of delegations of authority, right? This person can do this. 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 is not available or if regional directors of the board's not available having set things in motion so that you can move quickly. In the case of a crisis, let's say a plane went down. Let's say just people, the internet on the East coast went down and we would tabletop these things.
And 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 feeling 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 a hundred percent correct about it. I, Omar Bradley during the second 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 starts, it gets a little bit difficult to try to adhere to a piece of paper.
But having thought about and going through these pro the process, you have to do that. And I commend any credit union that, that. goes through these kind of exercises just to 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, a 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, the 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 one more thing and then be quiet.
And that is that one 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 experiencing 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 what? And when I think about when I think about. Checklist, I think about the NCA 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, four, five, six, seven page checklist, the conservatorship checklist, you go in, you count cash, you remove the officials. You call the corporate, tell them that there's a change of signature, you change the locks.
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 hits, 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 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 experience is the best teacher. Unfortunately, bad experience is the best teacher. And, I, 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 is maybe 72 hours after they knew about the breach. They mentioned to me that they've been ducking 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 evade or over 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.
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 nine 11 happened in New York city and the, 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 you do have a cyber attack when you do have Ransomware that prevents it, 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 longterm and how you're treating those people in their time of need.
Yeah. Yeah. And I, that's well said, and I think. 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, it's a good example of crediting and 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's 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 a 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 channels. So I got help.
I got some people, 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 a credit union 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 credit union's website, that directs the member to a specific dedicated page.
It's full of all the information, one stop shop, with everything you need to know about this particular breach or whatever it's going, or the ransomware, cyber attack, whatever it is. That landing page will be a one stop shop. That's something that Always recommend. It's always a good idea. We did that at the agency. We had a specials. It's essentially you're creating a parallel web page.
So when somebody came to ensure his 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. I, 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 pronunciation. Just a non sequitur there, but having another, having an alternate website. Ready to rock and roll where you can make those messages concise and focus makes a lot of sense.
Probably having a name like McKechnie and see how that goes.
M little C, big K, right? 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, to crisis communication, the aftermath after the dust settles?
Yeah, never stopped 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 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 NCOA back in those days too. But Patrick Swayze had this great speech. He gave, he was a 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, in this nice, comfortable podcast we're doing, when things are really happening, it's not. It's 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 a 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 credit unions that have been 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 the 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, I, 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. They the situations keep coming. You talked about, the emotional side the, 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. It's just the importance of having that empathy and being able to listen.
I remember when the corporate crisis happened and we had conserved U. S. Central and West Corps and Scott Hunt of the agency, who's still at the agency now, he's the Director of WANS, Scott Hunt and I were out at West Corps and the agency had taken over the West Corps and there were capital holders there and 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. Cause I know it's a tough one.
So there's empathy goes both ways.
Yes, it does. And giving the, giving out the vibe that, that look. It's a tough situation, but we've got it under control. We know what we're doing that sending out that kind of reassurance. I, you just touched upon something. I remember quite vividly. It was a painful moment during the crisis because one of the league presidents who I've 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, my members, my, my natural person credits, let these institutions fail. It's not the problem. Of the the natural person creating and our response. I remember myself and our general counsel at the time, the late grade Bob Fenner, and one, maybe you were involved in this too. We were like, if you let these institutions fail and blow that kind of a hole in the share insurance fund, 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 breach 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, if 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.
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?
We're talking mostly about. Events that are most, that are tech driven, the 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. I'm going to also quote John Wooden, the basketball coach. I
love this quote. You go, I love it. Go for it.
He said, be quick, but don't hurry. Is that the one you're thinking of? That's the one. Just want to, you want to get stuff, 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 and again, make sure you know who you need to communicate and what with, in what order it's all important dealing with the actual outside media is essential.
I got a an anecdote related to me just a week ago about A credit union that just refused to talk about the major to talk, they refused to talk to the major newspaper in their market. And your point earlier about how, if you create a vacuum, somebody else is going to fill it. And 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 one last war story from when we were out at Westcourt. So we were worried about the press and there was a little bit of press that was happening and then. We, we're looking out the window and we thought that 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 it's, you want to be good and lucky.
If 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 Coast. So we went from thinking we were going to be the top story to there not being any airtime for what might've been happening at the biggest conservatorship in the history of NCUA. So a little bit of luck and our preparation and the credit unions cooperations, everybody kept their deposits in. Everybody was going to get able to get their capital back.
I'll never forget.
I
Didn't
know that but we'll have to keep an optimum and in reserve in case we need that again.
That's right. Yeah, you just gotta, again, gotta 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 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 202 997 5816. Would love to hear from folks if you have any questions or suggestions. Thank you.
Very good, John. And I'll put the, 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.
Way 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 off with flying colors.