Congress won’t be back in session until the end of April, but even without lawmakers around the week ahead could still be one of the most significant of the entire year for credit union issues.
A panel of federal judges on Tuesday morning will hear from the National Credit Union Administration in its appeal of a March 2018 decision striking down two of the four components of the agency’s revised field of membership rule. That rule was finalized in October 2016 and immediately came under fire from the American Bankers Association. The chief components of the ABA’s argument are that NCUA overstepped its bounds in determining what makes up a core statistical area and that the new rules would allow credit unions to effectively engage in redlining. Many credit union trade groups have called foul at those allegations, and the Credit Union National Association, CUNA Mutual Group and the National Association of Federally-Insured Credit Unions have jointly filed amicus briefs in support of the regulator. As reported, credit unions face the possibility that judges could throw out all four components of the rule during the appeal hearing.
Credit Union Journal will have full coverage of Tuesday’s hearing.
With Rodney Hood sworn in last week as the new NCUA chairman alongside new board member Todd Harper, the NCUA board is operating at full capacity for the first time in three years – and just in time for the agency’s April open board meeting. The panel will consider a proposed rule regarding compensation in connection with loans to members (Part 701.21 of the Federal Credit Union Act), while in a separate closed-door meeting the board will examine supervisory actions related to the agency’s monthly prohibition notices.
Revised economic forecast
CUNA and CUNA Mutual this week are set to release details of a revised economic forecast from economists at the two groups. Mike Schenk, chief economist at CUNA, predicted "more significant headwinds, so we've lowered the forecast for economic growth overall and we expect the Federal Reserve to remain on the sidelines going forward."
Those headwinds include rising corporate debt, the uncertainty around Brexit and trade tensions with China. In 2020, the economy will continue to expand but at a somewhat lower pace. CUNA originally predicted that the economy would grow at 2.25%, but the agency decreased those expectations to 2.1%, Schenk said in an interview with the Credit Union Journal. That could mean more pressure on net interest margins and slower lending for credit unions.
One thing that doesn’t appear to be slowing is participation in the Volunteer Income Tax Assistance program offered by many credit unions in advance of tax day. With the filing deadline at-hand and some consumers are seeing reduced tax refunds, many CUs have seen an uptick in the number of consumers utilizing the VITA program, though those institutions are limited on the degree to which they can use the service as a growth strategy.
Lastly, a measure that would help credit unions retain their not-for-profit tax status and determine how they file certain forms with the Internal Revenue Services passed the House last week, though its prospects in the Senate are currently unknown.
