Its the time of year to give thanks, and some of the things credit unions are grateful for this year include continued gains in membership and loan growth, a rare alliance between CUNA and NAFCU, Wells Fargos misfortunes (and their potential to drive more consumers to credit unions) and, most notably, the prospect of regulatory relief under President-elect Donald Trump. Here are just a few things the movement might be celebrating this Thanksgiving.
Donald Trumps Victory
Though a polarizing figure who railed against Wall Street and globalism on the campaign trail, the president-elect has lately been seen as a champion for the banking industry. His promise to roll back regulations has been music to the ears of CUs who are struggling with a compliance burden that continues to grow. Whether Trump can keep his promises remains to be seen, but CUs are optimistic that Trump and a Republican-controlled Congress can battle back some of the regulatory forces that the industry has bemoaned for years.
Finally, an Interest Rate Hike
It has been almost a year since the Federal Open Market Committee raised interest rates, but the movement is cautiously optimistic that the Fed will do so when it meets in December. At a hearing on Capitol Hill last week, Federal Reserve Chair Janet Yellen said that while the economy is still not at full health, it is showing strong enough gains in hiring and overall growth to support a rate hike relatively soon. For CUs, which have suffered through years of shrinking net interest margins, it cant come soon enough.
Thanks, Wells Fargo!
The cross-selling scandal that kept Wells Fargo in the headlines for weeks and ultimately cost CEO John Stumpf (pictured above) his job didnt do much to improve the publics perception of big banking. For credit unions, however, it was a tailor-made opportunity to showcase the CU difference and the movements focus on member service, thrift, financial education and responsible lending. It even spurred the return of Bank Transfer Day, the 2011 event that kicked off some of the most significant credit union growth in decades.
CUs can also be thankful that the movements numbers continue to trend in the right direction, with membership now at 108 million and loan growth consistently going up. On top of that, the forecast for next year looks good, both from the perspective of lending and membership growth and the potential for a reduction in the compliance burden.
CUs, state leagues and national trade associations all lined up together this summer when the Department of Labor released a rule to take effect in December that would have nearly doubled the threshold at which millions of American workers are eligible for overtime. The movement was in favor of finding ways to improve wages, but feared that the rule would increase the regulatory burden and could potentially harm small CUs and those in rural and underserved areas. With the rule expected to go into place on Dec. 1, credit unions got a last-minute reprieve late on Nov. 22 when a U.S. District Court judge placed an injunction on the rule, putting its implementation date in question if it takes effect at all.
The National Association of Federal Credit Unions and Credit Union National Association dont often diverge on CU-related policy, but that doesnt mean theyre full-fledged partners, either. So that made the news all the more remarkable earlier this fall when the two trades joined forces for their first full partnership since the late 1990s, lining up alongside the National Credit Union Administration which is under fire from the banking lobby for its Member Business Lending rule and another suit on the new Field of Membership rule potentially looming on the horizon.
First Horizon, TCF and Webster are among the banks eyeing efficiency initiatives that could include more branch closings, layoffs and reduction of office space. Expect others to follow suit as low rates and tepid loan demand tied to the pandemic pressure revenue.
The Federal Deposit Insurance Corp.’s latest report on the industry’s health had positive news about the earnings recovery last quarter, but it also showed that low interest rates amid continuing economic uncertainty are putting downward pressure on asset yields.