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Rainy Day! What Rainy Day? Said Members

MADISON, Wis.-Deposit growth for credit unions ground to a near halt in 2005, growing by just 3.8%, the lowest since 1994, according to CUNA's year-end data released to The Credit Union Journal.

Only a major influx of billions of dollars on the last day of the year-December had an extra payday-prevented 2005 from being the slowest year ever for deposit growth. At the same time, lending expanded by a strong 11.2% last year, also the highest since 1994.

The similarities to 1994 are no coincidence according to Mike Schenk, senior economist for CUNA. That's the year short-term rates rose around 300 basis points, as they did last year, prompting members and consumers to borrow in the anticipation of higher rates. But Schenk said the experts predict the trend will moderate in 2006, "We expect faster savings growth and slower loan growth, but loan growth will still outpace share growth," he said.

Deposit Insurance Reform Bill Passes

WASHINGTON-The House overwhelmingly passed the Deposit Insurance Reform bill last week sending the bill to more than double insurance coverage for retirement accounts on to the President for his signature. The bill will raise the limit on retirement accounts, currently $100,000, to $250,000 each, and require NCUA and the banking regulators to start raising coverage limits for all other accounts, based on the rate of inflation in 2010. The bill will also merge the bank and thrift insurance funds, something that has been debated since the s&l crisis.

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