Predictions For 2006? Just Plug In 2003, Or '01, Or...
If you're always looking forward, do you ever have time to look back? And can looking back help you to look forward?
No, that's not the opening sentence from my forthcoming book, "Chicken Soup for the Confused, Double-Speaking Soul." Instead, those are a couple of questions that came to me as publications all over the country roll out the customary year-ahead previews this time of year. And that includes this newspaper, which has several previews beginning on page one and then appearing throughout the issue.
But what value do those previews typically have? How often are they accurate, or, at the very least, if they haven't hit the bull's eye, how often do all the predictions and previews and forecasts at least hit the target?
For instance, consider this headline from the front page of the Jan. 5, 2000 edition: "Congress Looks At Privacy Issue in 2000 Session." It's worth noting that that same headline could have also appeared on page 1 of every issue from 2000-2005, and even the front page of this issue. In this case, the concern was over the sophisticated data mining techniques that were being developed and the online banking information that was being captured. Many people were unaware then (and largely unaware now) how much of their own personal information can be captured just by visiting a website, and how easy (and profitable) it was and is for vendors to sell information about consumers-what sites they have visited, what they clicked on, what they're buying, etc.
Six years later privacy remains in the news, albeit for somewhat different reasons. First, there's the ongoing debate over how much authority government should have to monitor phone calls and e-mails in the name of homeland security. Second, a word and a scam that didn't even exist in 2000-"phishing"-has entered the lexicon, and represents a new threat: the unintentional yet voluntary surrender of private information. And third, in 2006, people who had never heard the phrase "backup data tape" have had to worry over whether they are among the hundreds of thousands of people whose names, Social Security numbers and other data are part of the data tapes that increasingly seem to get "misplaced."
Perhaps what is most noteworthy about the headline in the Jan. 5, 2000 issue of The Credit Union Journal, however, was what it was not: "Dire Y2K Predictions Prove True: Computer Calamity Strikes!" For those of you who have forgotten what a big deal Y2K was/was not, we had a story on Sonoma County Schools Credit Union in California, which threw a New Year's party on Dec. 31, 1999 in which it stayed open to midnight and beyond and used a "Who's Afraid of Y2K?" theme.
In that same issue, incidentally, was also another example of the old adage, "the more things change..." Inside, credit union lobbyists were quoted as saying that when it came to regulatory relief, "chances are slim that Congress will return to regulatory relief for financial institutions after passing (1999's) landmark bank reform bill."
And that isn't the only d?j? vu reporting to be found. On the cover of the Jan. 6, 1999 issue, a front-page story reported that the Ohio Bankers Association had formed an "OBA Militia" The Buckeye Bankers said credit unions had nothing to fear, as the Militia had been formed as a grassroots-level lobbying force that, in fact, had been inspired by credit unions. Apparently the Militia is doing it's job, as Kentucky and Michigan's bankers have yet to invade.
In fact, the more one pages through past issues of the newspaper, the more one could suspect that we're just running the same stories over and over so that we can stay out later ourselves on New Year's. Take these three stories from the Jan. 8, 2001 issue: in the first, The Journal reported that even with all of the lay-offs at numerous dot.coms (What! We have to have income?), credit unions were still expecting there to be shortages of qualified IT staff. "In a lot of ways it's easier to find a CEO than a vice president of IT," observed David Hilton of D.Hilton Associates at the time. In the second story, The Credit Union Journal asked where were all the $1 gold coins that were supposed to be in circulation? There were lots of theories, but no firm answers. Perhaps all those unemployed IT execs were hoarding them. A third story highlighted a study from CUES that had found that technology and all its related costs had increasingly become a driver in mergers.
In the Jan. 7, 2002 issue, six credit unions shared their resolutions for the new year. Among them: overhaul the entire lending operation, boost the loan-to-share ratio; tackle the 0% financing deals from the automakers, put outreach to low-income groups back on the front burner, increase the charge-off ratio (as an indicator that more loans were being made and policies expanded), and do a better job of sales tracking. Many of those resolutions could be and have been adopted by credit unions headed into 2006.
In our first issue of 2004, one prognosticator pointed to eight trends worth watching, including that "bundled services are here to say," "connectivity will become a key issue in strategic planning," and "Smart Sourcing will be adopted as a management practice." There was also another prediction that might sound familiar: "Rising rates will result in interest spread compression and a cooling mortgage market." Just keep in mind as you make plans for this year, if there is one word to describe the mortgage market of 2004 and 2005, it wasn't "cooling."
There was one other point that ran consistently through many of the forecasts for coming years, and it's one I'm going to stick my neck out on for 2006, as well: rates will definitely move up or down. That is, if they don't remain the same.
Frank J. Diekmann is editor of The Credit Union Journal and can be reached at fdiekmann