ARLINGTON, Va.—The strong potential for rising interest rates has credit union leaders more optimistic about the future of their organizations, according to a new report.
NAFCU’s Credit Union Sentiment Index (CUSI) rose "solidly" in January due to an improved assessment of loan demand.
The index is based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden.
“Last month’s sentiment survey respondents attributed an improved outlook on earnings to anticipation of an improving interest rate environment,” NAFCU stated.
In addition, NAFCU's latest Economic & CU Monitor also looks at a number of other issues, including economic returns from January, overdraft programs, Regulation E compliance, token errors, and more.
According to the ECU Monitor, a major concern for financial regulators is financial institution compliance with consumer financial law regulating payments and overdraft programs. Overdraft programs continue to enjoy consumer support based on analysis of opt-in rates reported by NAFCU members.
Additional Revelations
The association’s 2021 Federal Reserve Meeting Survey also revealed that a majority of credit union members have opted into courtesy pay programs. Often these programs serve as an alternative, cost-effective form of short-term credit for members that must make a time critical purchase and protects members from predatory payday lenders. Respondents also reported that overdraft programs help support free checking accounts, financial literacy, and emergency loan programs, NAFCU stated.
However, overdraft programs remain the subject of ongoing regulatory scrutiny. The NCUA has indicated in its2022 supervisory prioritiesthat examiners will collect policies and procedures governing credit union overdraft programs; the CFPB also published new regulatory guidance regarding error resolution procedures, NAFCU noted.
Support for Changes
On the topic of unauthorized P2P transfers, all survey respondents indicated they would support changes to Regulation E that adopt a more hierarchical error resolution process, while half reported that they had observed an increase in the number of error claims associated with P2P transfers.
Of note, NAFCU reported respondents expressed their views on the CFPB’s most recent guidance related to token errors. Most respondents indicated that compared to other types of payments errors, it would take a longer time to investigate a token error.