Posts tagged ‘testimony’

Five Things You Need To Know As You Start Your Credit Union Day

Usually gleaming anything useful from the congressional testimony of Fed Chairman is about as easy as interpreting hieroglyphics without the use of the Rosetta Stone but yesterday was a glaring exception. Most importantly for credit unions all the major news outlets that I read this morning agreed that Jerome Powell was all but announcing that the Fed will be cutting short-term interest rates soon.

In his testimony he deemphasized the latest encouraging jobs report and made it abundantly clear that the uncertain times we live in are impacting the economy. Specifically, he noted that “crosscurrents have reemerged. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data. In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.”

Translation: inflation is in check and while the economy is growing it could use the boost offered by a rate cut which will be particularly beneficial to workers on the lower end of the economic pay scale.

Powell to Trump: Hell no I won’t go

Another incredibly blunt moment of the Chairman’s testimony came in response to a question from House Financial Services Chairman, Maxine Watters who asked him how he would respond if the President was to ask him to resign. Powell has of course been a prime target of the President’s tweet tantrums lately. “My answer would be no,” Powell responded, making it quite clear that any effort to remove him would result in a messy, messy legal dispute.

Powell to Facebook: Not so fast

Powell was also in a targeted mood when it came to throwing cold water on the plans of Facebook and other companies to introduce a crypto currency (See Monday’s blog). According to the American Banker, Powell responded to lawmaker questions on the issue by bluntly opining that the project can’t go forward until regulators are satisfied that the companies have a better feel for the full range of issues ranging from potential money laundering to the creation of a systemically important currency which conceivably could have the potential of dealing a body blow to the entire world’s economy.

Reg CC Update

The NCUA recently provided this notice reminding credit unions, among other things, that the monetary thresholds promulgated under Reg CC have been updated. You might want to make sure that your cooperating system got the message.

A Good Read

Finally, although it’s not directly related to credit union land, here is a great article by Greg Ip of the WSJ delving into one of my favorite issues: is there a skills gap in the American economy?

July 11, 2019 at 9:27 am Leave a comment

Not morning in America yet

What strikes me about Ben Bernanke’s Congressional testimony this week is how he took pains to emphasize that the country’s economy is far from out of the woods.  It’s not morning in America, he seemed to be saying.  For instance, while it is good news that the jobs report was more robust than expected, he stressed that the number of long-term unemployed remains at historically high levels and that uncertainty, fueled in part by Congressional inaction, can still hold the economy back.  Press reports also noted that his comments lay the ground work for further monetary easing and reiterated his commitment to keep interest rates from rising through 2014. 

To understand Bernanke’s caution you have to understand that whether you agree or disagree with his policies, you’d be hard pressed to find any public figure whose background and training prepared him more for the situation he found himself in when the economy entered the Great Recession.  Before he became a member of the Federal Reserve Board, he was a professor at Princeton and a leading expert on the causes of the Great Depression.  In a 2002 speech, he lauded Milton Freidman and his wife Anna Schwartz for their work in this field, the central idea of which is that excessively tight monetary policy in the years 1929-1932 caused the Great Depression.  This may seem like common sense today, but as Bernanke pointed out in the speech, conventional wisdom previously held that monetary policy, if anything, was a reflection and not a cause of the economic downturn.  In addition, Europe’s continuing debate about how to handle the Greek debt crisis shows that for many policy makers inflation and not interest rates is the single greatest threat to economic stability.  At the end of the 2002 speech, apparently with the honorees in the room, Bernanke said “you’re right, we did it.  We’re very sorry but thanks to you, we won’t do it again.”

I have no doubt that the Chairman sees the period when the country gains its economic strength back as the last stage of his anti-Depression strategy.  In the 1930’s, employment spiked after beginning to decline after the federal government eased back on its economic stimulus.  When Bernanke writes his memoirs, he will argue that  by resisting premature calls to raise interest rates, he learned the lessons that Friedman taught and prevented another Great Depression.

February 8, 2012 at 7:30 am Leave a comment

Testimony tightrope

Late Friday, CUNA announced that “in an unprecedented twist,” CUNA President Bill Cheney will comment on the community bank regulatory reform bill at a House Financial Institutions subcommittee hearing  considering HR 1697, a.k.a. the “Communities First Act” (let’s face it bankers do a much better job naming their bills than we do — CURIA always sounded to me like something you would not want to catch).  The bill includes a series of regulatory relief measures for Community Banks and is one of their top legislative priorities.  The witness list also includes NAFCU president Fred Becker.  I’ll be watching the hearing, but with a little queasiness.

For decades, the banks have engaged in zero-sum game politics toward credit unions.  How else to explain a lawsuit to block credit unions from providing services to underserved communities or fighting to keep credit unions in New York State from holding municipal deposits even though those same municipalities can form credit unions?  The problem with zero-sum politics is that it does nothing to benefit the consumers who are denied the opportunity to choose from the maximum number of healthy financial institutions. 

Conversely, there is no reason why bankers should be allowed to weigh in on any credit union proposal without the same courtesy being  extended to credit unions with regard to issues that affect the larger financial industry.  I hope we use the opportunity to support elements of the legislation that are consistent with the credit union philosophy, such as the provision that would exempt from escrow requirements any loan held by a creditor with assets of $10 billion or less.  We should also point out the obvious:  that it makes no sense to pass legislation granting regulatory reform so Community Banks can help the American consumer and not pass legislation helping credit unions provide member business loans to the same consumers.  The bottom line is that if legislation helps the consumer, we should not it oppose it simply because it enhances the power of banks.  What we should, and do, oppose is a political norm  that has for too long catered to zero-sum politics at the expense of consumer choice.

November 14, 2011 at 6:19 am 2 comments

Authored By:

Henry Meier, Esq., Senior Vice President, 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. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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