SAN DIEGO — They traverse the country speaking at conferences of all types, so what are financial industry consultants hearing about the state of the economy?
Ron Shevlin, senior analyst, Aite Group, a Boston-based research and advisory firm, said any discussion of a recovery from the recent recession depends on whom one is talking with and where that person works and lives.
"On the credit union side, there is a lot of optimism," he reported. "This is a result of money walking in the door last year. People have taken a lot of money out of big banks through a lack of confidence and trust. Credit unions are seeing membership growth despite the downturn, so they have guarded optimism.
"I say guarded," he continued, "because they still have long-term capitalization issues. Also, lending demand is depressed, so they don't always have good uses for the funds that are walking in the door."
According to Shevlin, there is trepidation among many CU leaders regarding upcoming regulatory changes and the uncertainty such issues bring. "Credit unions feel they will be punished for something they did not do. They are being lumped in with banks, and that is driving negativity in their long-term outlook. The economy goes up and down, and it always has, but regulatory changes are driving negativity."
Terrence Roche, principal for Cornerstone Advisors, Scottsdale, Ariz., told Credit Union Journal the one question he hears over and over from conference attendees is: How much risk management staff do I need?
"People tell me all the time they have to deal with fraud management, vendor management, regulations, and all of these are such a burden."
As for the economy, Roche noted the national unemployment rate still is at 9.5%, which to him means talk of recovery is a bit premature.
"The turnaround is true when unemployment is normal again and profits are generated by growth, not cost cutting," he assessed.
Roche said NCUA hitting credit unions with the corporate assessment before the accounting change that allowed credit unions to take the hit over time "spooked the whole industry."
