Another interest rate cut from the Federal Reserve could increase the pressure on the bottom line at credit unions.
The Fed is scheduled to meet Tuesday and Wednesday and rumors of another interest rate reduction – the board’s third so far this year – could result in even fiercer competition for deposits at credit unions. The Fed is expected to cut interest rates by another 25 basis points, which would place the federal funds rate index around 1.5% to 1.75%.
“If a credit union does not raise rates consistent with their competition, they certainly could see their deposits leaving,” Curt Long, chief economist at the National Association of Federally-Insured Credit Unions,
The potential rate cut arrives at the heels of new industry data that suggests banks have been paying better rates for deposits over the past few years, a finding that
Lawmakers could also make moves this week impacting the industry. The House Financial Services Committee is expected to mark up a slew of bills in the coming days, one of which would require financial regulators — including the National Credit Union Administration — to update Congress on supervisory and regulatory efforts in a semiannual report.
The regulator is already in a thorny position with some Democratic lawmakers after NCUA Chairman Rodney Hood appeared in a video that praised U.S. President Donald Trump. That resulted in sharp criticism from Sen. Sherrod Brown, D-Ohio, who questioned the NCUA's independence and
Discussions will continue this week on the fiscal year 2020 National Defense Authorization Act, which has caused a flurry of debate regarding the clause that would grant banks access to the no-cost land leases that credit unions enjoy.
The House Financial Services Committee is also holding a hearing Tuesday that reviews discrimination in lending and housing that LGBTQ+ individuals face. A new credit union was chartered in Michigan earlier this year to
