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Tax Man Helps To Slow Inflow Of Deposits

MADISON, Wis.-The flood of new savings that has inundated credit unions the past 18 months slowed down in April. Savings grew only .14% (about $1 billion ) in April, the smallest increase this year, according to CUNA. "You normally see that in April because of taxes. People are withdrawing money to pay the tax man," Steve Rick, a CUNA economist told The Credit Union Journal.

Loan growth was strong for the month, at 1%, with used car loans expanding by 1.5% and fixed real estate loans by 1.1%. Adjustable-rate real estate loans grew by 1.2% and credit card loans by 0.8%, spurred by some members paying their taxes with their credit cards, said Rick. The slower savings growth tightened liquidity a little, with the loan-to- share ratio rising from 67.4% at the end of March, to 67.9% at the end of April. Net capital held steady at 10.6%.

SC 'Predator Law' Sets A New Standard

COLUMBIA, S.C.-South Carolina Gov. Mark Sanford signed into law a new anti-predatory lending bill which sets the lender's conscience up as an objective standard of what are excessive fees. The credit union-backed law introduces the standard referred to as "unconscionability," which it defines as interest rate and fees charged that would "shock the conscience."

The law defines a high-cost loan as one with points and fees that exceed 5% of the principle; limits refinancing of a loan to 42 months, and requires the new loan to provide a reasonable tangible net benefit to the borrower. It also requires that borrowers of a high-cost loan must be provided free mandatory counseling.

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