NEW YORK — Making a loan is always an exercise in risk management for any credit union. But analysts told the Credit Union Daily there are few underwriting scenarios are as perilous as financing the gifts described in the traditional carol “The 12 Days of Christmas,” a song that doubles as a case study in why credit committees exist.
From livestock concentration risk to uninsurable avian assets, each verse presents a cautionary tale for banks and credit unions tempted by festive cheer.
Day One: A Partridge in a Pear Tree.
Collateral risk emerges immediately. Agricultural assets depreciate quickly, pear trees are illiquid, and partridges are notoriously hard to repossess.
Day Two: Two Turtle Doves.
Loan officers flag single-purpose collateral. Turtle doves generate no income, and their resale market is thin outside of poetry circles.
Day Three: Three French Hens.
Cross-border risk enters the picture. Are the hens imported? Are tariffs involved? Compliance departments quietly close the file.
Day Four: Four Calling Birds.
Operational risk spikes as the birds create nonstop noise complaints. Property values near the borrower’s home decline. Repo’d birds present risks of numerous complaints to HR.
Day Five: Five Gold Rings.
For most credit unions, this gift appears safe until appraisal issues arise. Are they solid gold, gold-plated, or from a mall kiosk? Fraud risk is elevated.
Day Six: Six Geese A–Laying.
Environmental and sanitation risks emerge, along with escalating feed costs. Egg production is seasonal, making cash flow projections unreliable.
Day Seven: Seven Swans A–Swimming.
Insurance underwriters balk. Swans are aggressive, mobile and prone to lawsuits, particularly from nearby kayakers.
Day Eight: Eight Maids A–Milking.
Human capital risk dominates, as both state and federal regulators attempt to find relevant regs in exam manuals. Labor law questions multiply, payroll costs soar, and HR insists the borrower clarify the business model, given that automation has replaced most maids-a-milking.
Day Nine: Nine Ladies Dancing
Revenue volatility becomes the concern for this dance troupe. Ticket sales depend on weather, trends and whether the dancing goes viral for the wrong reasons.
Day Ten: Ten Lords A–Leaping
Governance risk surfaces, as in this organization titles are unclear, oversight is minimal, and no one can explain why the lords are leaping in the first place.
Day Eleven: Eleven Pipers Piping
Reputational risk peaks. Community complaints roll in and put business at risk, beyond just the seasonality of the company’s offerings. Meanwhile, regulators question whether the noise violates local ordinances and common sense, putting business at additional risk.
Day Twelve: Twelve Drummers Drumming.
Systemic risk is declared, while potential booking conflicts arise between the drummers and the pipers. Credit officers develop headaches from the drummers while trying to explain the danger of ignoring concentration limits and mistaken Christmas spirit for a sustainable growth strategy.
The Final Verse
By the final verse, lenders agree on one thing: while the holiday season encourages generosity, underwriting standards remain stubbornly unseasonal.
As one risk officer put it, “Joy to the world is great. But not on our balance sheet.”
One Response
Very cute. Thanks for the laughs!