BIRMINGHAM, Ala.-Credit unions are enjoying a slow, but steady, improvement in the bottom line thanks to an improving economy, and the second half of the year holds similar promise-that is, unless the Consumer Financial Protection Bureau mucks things up, an expert suggested.
"If you asked the average credit union CEO or board chairman where they see the greatest regulatory threat to their credit union in the next few years, most would say the CFPB with its over 100 proposed regulatory areas of attention out for public comment in the first quarter of 2013," observed Dennis Dollar, principal with Dollar Associates. "If the CFPB keeps the nation's need for sustainable economic recovery in balance with its mandate for consumer protection, this could be a great 2013 and 2014 for credit unions and their members."
Dollar, the former chairman of NCUA, has similar concerns that if the agency issues too many DORs and LUAs, it could make CUs too risk averse and afraid to invest in new products, services, branches and technology.
"The economy may not be roaring back, but it is definitely on a rebound. Lending is up, and housing pricing has stabilized," said Dollar. "Foreclosures are selling in most areas and the glut of homes on the market is beginning to wane. All of these are good economic signs. Will credit unions find themselves back in the good old days of the late '90s and early 2000s when 1% ROA was the norm? That is unlikely. We are still in an era of tight margins whereby a 65 to 70 basis point ROA is a very strong year."
