Eight Trends that will impact CUS in 2016
I like to use my final blog of the year to look ahead to the trends that will most impact the industry next year. Here is my list of educated guesses.
Accounting for the next disaster. The Federal Accounting Standards Board is poised to finalize accounting standards that will directly impact how credit unions and banks account for potential loses. The proposal could have a bigger impact on credit unions than the Risk Based Capital rules, so get your accountant on speed dial.
Overdraft Overhaul. Are you ready to have your members opt in to all overdraft services? How about limits on the size and number of overdraft fees? What about new disclosures? All of these are possible when the CFPB formally looks to limit the use of overdraft services this year.
China Syndrome. World events have had more and more of an impact on the economic environment in which credit unions operate. My nominee for this year’s Greece is China. If the slowdown in the Chinese economy ends up being more sustained and severe than pundits currently suspect we could be looking at a recession in the U.S. and political instability in an increasingly nationalistic China for years to come. In a worst case scenario think Putin on steroids.
Political Fantasy. Donald Trump offers a blanket insult to everyone in America and his poll numbers skyrocket because of his level-headed even handedness. Not to be outdone, Senator Cruz insults the entire world. Jeb Bush performs surprisingly well in New Hampshire and gets enough momentum to stick around. Speculation rises that Republican Party elders hope that no one gets the delegates they need to secure the party’s nomination. In a brokered convention, Paul Ryan emerges as the consensus candidate and narrowly defeats Hilary after Trump and Ben Carson both run as independents. My point is, Silly Season is fast approaching. Don’t expect to see anything useful accomplished in Congress next year.
Will the industry hang together or hang separately? With dual membership requirements being phased out, I certainly hope that whatever new structure emerges continues to emphasize the need for a coherent and unified voice on credit union issues. I would hate to see a circular fire squad emerge that would benefit no one but banking lobbyists.
The year of Guidance. With the overhaul of MBL regulations and further regulatory tutorials on interest rate risk on the horizon, we will start finding out just how much more flexibility credit unions have when complying with general mandates as opposed to black and white regulations.
FOM Reform. NCUA’s proposed FOM reforms are out for comment and, although they are a step in the right direction, my guess is that the industry will find that not enough can be done by amending regulations. Congress needs to act, but don’t hold your breath. In the meantime, state policy makers are where credit unions will have to turn if they want greater FOM flexibility.
Fewer but Larger Credit Unions. Are credit unions an endangered species? No, but expect their number to decline and the survivors to get even bigger. In 2014, the majority of credit unions lost members. In addition, at the end of October, CUNA Mutual reported that there were 6,264 CUs in operation, down 36 credit unions from one month earlier. Year-over-year, the number of credit unions declined by 316, more than the 254 lost in the 12 months ending in October 2014. There is no good reason to think that this trend won’t continue or even accelerate. (https://www.cunamutual.com/~/media/cunamutual/about-us/credit-union-trends/public/dec_2015_cu_trends_report_media_file.pdf)
On a happier note, thanks for reading, Happy Holidays and I will be back blogging next year. Now it’s off to Grandma’s house I go.