Three Trends Impacting Your Credit Union Today

November 14, 2012 at 7:31 am Leave a comment

This morning’s newspapers highlight three of the biggest things impacting your credit union operations:  big box retailers, the fiscal cliff and the CFPB.

The New York Times has an article this morning highlighting what credit unions should already know.  The biggest threat to the credit union industry isn’t the bank down the street but the big box retailer.  Increasingly, the unbanked can get the loans and cash they need from places like Walmart and Home Depot.  What’s more, the article highlights a trend where some people are leaving their banks completely because they can get all the services they need without the fees.  The challenge for credit unions is clear:  how do we demonstrate to people the importance of establishing an account relationship with a financial institution while staying in business against competitors who price financial products cheaply in order to get people interested in buying the products they are actually in business to sell?  This is yet another example of why I think the traditional branch model is going the way of the horse and buggy.

The CFPB will lose one of its most important staff people early next year.  Raj Date, the Deputy Director, will be leaving on January 31st.  The Deputy Director title really doesn’t do justice to the role he has played within the Bureau.  Before Richard Cordray was appointed as Acting Director, he was the de facto head of the Bureau.  The articles point out that he’s a CFPB regulator who comes from the financial industry.  This is pure speculation on my part, but his departure would seem to indicate that the Bureau has decided which direction it’s going to go on the all important mortgage regulations to be unveiled early next year.

Finally, the game of Russian Roulette with the American economy known as the fiscal cliff is getting off to a rousing start.  Republicans and Democrats agree that the combination of spending cuts and tax increases scheduled to take effect in January would be a disaster for the American economy; neither side wants it to happen, and both sides think it will ultimately be avoided, but the gamesmanship could get ugly.  Yesterday, President Obama indicated he would push for double the amount of tax revenue that he was reportedly willing to accept as part of a grand bargain with Speaker Boehner a couple of years ago.  Also yesterday, Treasury Secretary Timothy Geithner ruled out the possibility that the Administration’s tax revenue goals could be met simply by ending tax deductions.  This means that the Administration will insist on raising the top tax rates on higher earning Americans.  The problem is that a rate increase is a no go for the Republican leadership.  Someone is going to have to blink or this is going to quickly get ugly.

Entry filed under: Compliance, Economy, General, Regulatory. Tags: , , , , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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