LAKEWOOD, Colo—Credit union leaders expect greater compliance burden and more changes to occur within financial services from the Democratic-controlled administration than what was seen under the former Trump administration, a new study reveals.
According to a survey of 38 credit union decision-makers by the CUSO Aux that included 22 questions on a variety of topics that effect credit unions, the findings revealed concerns around:
- Student loan forgiveness, minimum wage increases, and marijuana legalization effects
- Compliance and accounting regulations
- New leadership and changes at the CFPB
- HMDA changes
- CECL changes
- General hypotheses on a negative/positive impact to the industry
“Aux, a leader in credit union research and collaboration, hopes to provide insight into the effects of a ‘Blue Wave’ within the executive and legislative branches of government as well as primary-source perspectives on how this concentration of political power could affect credit unions in the year ahead,” the company said.
Specific feedback in the Aux survey includes:
Marijuana
When asked if marijuana would become legal in all 50 states within the next 2 years, 32% of participants said yes, 55% said no, and 13% said other (5 years or not anytime in the near future).
Student Loan Forgiveness
When asked to rate the likelihood of student loan forgiveness being passed in 2021, responses averaged right in the middle at 53, on a scale of 0 (not likely at all) to 100 (extremely likely). Responses ran the full gamut, from 0 to 100.
Minimum Wage
When asked what the likelihood was of a national minimum wage increase to $15 per hour being passed this year, responses averaged 60, on a scale of 0 (not likely at all) to 100 (extremely likely).
CFPB and NCUA Changes
Aux asked participants if they thought new leadership at the NCUA and CFPB will result in
more or less compliance burden for credit unions. On a scale of -10 (much less) to 10 (much more), the responses averaged an 8, which shows a significant expectation across the board that there will be more compliance burden.
Finance and Accounting
Participants were asked what the financial and accounting risk reporting requirements environment will be like over the next two years. On a scale from -10 (less stringent) to 10 (more stringent), the average was 6, a considerable consensus of more strictness.
Compliance
Participants were asked what the credit union regulatory and compliance environment will be like over the next two years. On a scale from -10 (less stringent) to 10 (more stringent), the average was 7, an even more considerable consensus of severity.
Regulations
HMDA
When asked if participants anticipated any changes to HMDA regulations, 61% said yes and 26% said no, and the rest unsure.
CECL
When asked if participants expected the implementation of CECL would be moved up or further delayed, 53% said further delayed, 13% said moved up, and 34% said it would stay the same or they weren’t certain.
MBL Cap
Aux asked how likely is it that Congress and the regulatory agencies will address the MBL cap, and participants were split down the middle. On a scale from -10 (not at all likely) to 10 (very likely), the average was 0.
Consumer Data
When asked if participants expect stricter controls and regulations regarding consumer data/information protection, 100% said yes. This was the only question in the whole survey where the answers were unanimous, Aux said.
General Impact
When asked if the Biden Administration would be more or less focused on making changes in the financial services industry than the Trump Administration, 75% felt that Biden would be more focused on making changes.
Participants were asked if the credit union tax exemption was more or less at risk with the concentration of partisan political power. On a scale from -10 (less at risk) to 10 (more at risk), the average was 4.
“Interestingly, responses ran the full-scale range, from -10 to 10, illustrating the vast difference in opinion regarding the future of tax exemption,” Aux said.
‘Hopeful’ Approach
Aux CEO Doug Burke said he is taking a moderate, “hopeful” approach to the anticipated industry changes.
“The national environment is very divided at the D.C. political perspective, with consumers and credit union executives. I believe the Blue Wave will lean toward democratic ideology and we will see them pushing their agenda while they have the power,” he said. “But I also believe the president won’t be abusive with the power to try and make it look like he’s not slamming the Republicans. He will try to have some balance…but with the blue tint.”
‘Not Anti-Business’
Aux VP of Compliance Gaye DeCesare, who has been involved in credit union compliance for 30 years, urged credit unions to take a step back and not jump to conclusions.
“Pro-consumer is not equal to anti-business,” she said. “Many credit union executives are concerned about the administration’s effects on American businesses. In my experience, I’d advise a measured approach. Let’s see what happens and act accordingly.”
And one CU executive in the study shared a less optimistic outlook, saying, “I see no positive impact. Anyone who believes the impact will be positive to CUs is an absolute idiot.”