ARLINGTON, Va.–While credit unions are the perfect solution for helping members through the current pandemic, they must also begin making strong plans for 2021, according to NAFCU President/CEO Dan Berger.
“You were built for this moment,” said Berger during the opening session of NAFCU’s 2020 Virtual Caucus. “Think of all the challenges we have been through—9/11, the financial crisis of 2008-2009…But don’t rest on your laurels, or hide in the corner. Begin now to build your runway for 2021. Yes, it’s been a challenging year, but my money is on you, and you have always come through with flying colors. You have the capital and infrastructure. Find your fintech partners. Make sure you are out there and have programs ready to launch for 2021, as you will get through this.”
Berger said he arrived at his conclusions after reviewing what has occurred in Washington and the economy over the last several months.
Berger talked about how getting funding for Main Street businesses through the Paycheck Protection Program (PPP) was difficult at the outset, as the big banks with their strong SBA connections accessed the funding quickly and dispersed the dollars to large businesses. However, in the second round of PPP, CUs were able to deliver much greater support to small businesses, handing out loans that averaged about $50,000 to many members who needed the vital support, he noted.
On the Lookout
Berger said NAFCU is lobbying Congress to ensure any future stimulus spending does not carry with it unneeded and possibly harmful provisions for credit unions, such as bans on debt collection, as are contained in the current House version of the HEROES Act.
“The ball got passed from House to the Senate…I think we will be successful in working with other trade associations to make sure a more narrow version of the bill comes out of the Senate, without the troubling provisions,” he said.
Berger also cautioned that Senator Richard Durbin (D-IL) is once again focusing on interchange, and this time he is also looking at credit cards.
“We are working hard to protect credit unions’ credit card interchange,” Berger said.
Turning to the CFPB, Berger said NAFCU has been in discussions with the agency to ensure greater clarity is provided around its regulations and that more regulatory relief is provided to credit unions.
Looking Forward
Looking forward, Berger said both auto sales and mortgages are leading the recovery.
“Retail sales plummeted, but have bounced back strong,” said Berger. “But it will take a while to get back to pre-pandemic levels. But it is a good sign retail sales are trending up.”
Berger said the comeback in auto sales is due to consumers becoming more comfortable buying during the health crisis, stimulus money, and aggressive pricing from automakers.
“Existing home sales plummeted for a couple months—there were a lot of loans that were just frozen in the pipeline,” he said. “There were no real closings for 60 days, and now all that is coming back. I think we will see numbers elevated the rest of this year and into next year.”
And as the year winds down, Berger urged credit unions to pay close attention to ROA, with headwinds not going away. “This is what keeps a lot of CEOs up at night,” he said.