The good, the bad and the ugly

March 13, 2013 at 7:40 am 3 comments

imagesCA003WXNThis is one of those Wednesdays where there is so much news to tell you about that it is time for an edition of the good, the bad and the ugly.  Any one of these topics are blog worthy in and of themselves at a future date, so stay tuned.  Can’t you feel the excitement?

The Good

The economy is showing further signs of strengthening, or at least that is what people who follow these things for a living say.  An analyst at Morgan Stanley, Vincent Reinhart, is the latest to come out with an aggressive prediction on future U.S. growth.  He argues that the economy is reaching an inflection point and that it will pick up steam in the middle of the year.

Incidentally, one of the things holding the economy back is political instability both at home and abroad with Congress playing Russian Roulette with debt ceilings and Europe continuing to stick its head in the sand about the need for greater fiscal integration if it is going to save the Euro.  So more good news yesterday was that both House Republicans and Senate Democrats released proposed budget plans for the next ten years.  Ok, I know these plans are nonsense, but considering that the Senate hasn’t passed a budget resolution in four years and that the House plan indicates a willingness to consider defense cuts as part of a “grand bargain,” there’s at least a shred of hope that Congress might actually do something, at least if you want to be a wild-eyed optimist like myself.  As for Europe, putting aside for the moment that Italian voters want either an ex-comedian or a disgraced former Prime Minister as their next leader, Ireland announced yesterday that it felt confident enough in its own economy that it would soon be issuing a ten year bond to finance its public debt for the first time since 2010.  Ireland has done everything the hard-line fiscal reformists say Europe’s debt-troubled countries should do, and a successful bond issuance would be the best proof yet for them that their tough love approach is actually paying dividends for Europe.  So, I say to my Irish brethren, may the bond-buyers rise to meet you.

The Bad

Whether you agree or disagree with the need to reform the CFPB governing structure, there’s a perfect storm brewing which would do more harm than good for credit unions.  The Obama administration signaled yesterday that it would be appealing to the Supreme Court an Appellate Court decision striking down his recess appointments to the National Labor Relations Board as unconstitutional .  The Justice Department could have bought itself more time by making a motion to reargue the case.  As I explained in a previous post, if the NLRB recess appointments are unconstitutional then it’s virtually certain that the recess appointment of one Richard Cordray is also illegal.  Why is this bad, say you haters of the CFPB?  Because with or without a director, Dodd-Frank mortgage requirements are going to take effect.  We can either implement them against the backdrop of regulatory certainty provided by the CFPB’s regulations or take reasonable guesses as to how best to interpret Dodd-Frank.

By the way, as this You-Tube clip shows, Massachusetts Senator Elizabeth Warren really is making C-SPAN must-see TV.  I personally would hate to get on her bad side.

The Ugly

Small business lending is on the rise but credit unions are getting squeezed by the MBL cap.  As explained in this post from Bloomberg Business Week, the Bizzcredit Index of Small Business Lending shows that the credit union loan approval rate for small business loans has fallen for 9 straight months.  Two possible explanations:  1) as banks lend more, credit unions are getting lower quality applicants and 2) credit unions can’t lend as much as they want to because they have to manage the cap.

On that note, have a nice day.

Entry filed under: Advocacy, Compliance, Economy, Political, Regulatory. Tags: , , , , , , .

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3 Comments Add your own

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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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