As loangrowth continues to blossom in the New Year, hopefully it willnot be nipped in the bud by overzealous regulators or lack ofleadership. Agility is as important in business as it is involleyball; the ability to adapt to a changing environment iscritical. NCUA Chief Economist John Worth acknowledged that, although theindustry overall is showing growth, that excellent news is temperedby the fact that smaller credit unions—the bulk of credit unions—are not growing.

Loans increased 9.6% year to date as of November 2014, accordingto CUNA, which is great news. University of Iowa Community CreditUnion grew more than 19%, and so it stand to reason credit unionsexist at the opposite end of the spectrum. While the nationalmedian loan-to-share is about 58%, a handful of credit unions aremore than 100% loaned out, which means there are credit unions at the otherend of the spectrum as well.

However, membership decreased at 54% of credit unions in 2014, whichmeans the credit unions that aren't growing membership arecontinually going back to pick petals from the same daisy.Eventually those members' borrowing capacities will be tapped andthese credit unions may be beyond their opportunity to add newmembers. When membership growth has never been stronger in recentyears, the decline is a strong indicator that something doesn'tsmell quite right.

Even those credit unions that are busy cultivating a strong loanharvest could feel the twinge of the frosty regulatory environment.The CFPB, for example, is looking at regulations for paydaylenders, according to a report in The Wall Street Journal. This is new territory for anyregulator, but it is bound by the law of unintended consequences tohave an impact on credit unions. No one wants to see consumerstaken advantage of, especially credit unions, but what the articlesuggests might be in the proposal runs counter to why payday loanscame to be. So-called consumer advocates, the article reads, wouldlike income verification, ability to repay and credit historyincorporated into the approval process, burying the borrower in apile of regulatory, uh, fertilizer that they were looking to avoidfrom the start.

These consumer advocates call the loans deceptive becauseborrowers roll them over multiple times and rack up fees. Theconsumer groups are blaming the product for borrowers using it. Inwhat world does that make sense? Properly disclosing fees and howthey work is important and maybe limiting the number of times theloan can be rolled over. But requiring a credit check and incomeverification will not only drive even the better payday lenders outof business, but also the desperate borrowers away from theproduct. And then where do they go—to Joisey cuz their cousin knowsa guy? If a borrower could not get a better loan at a financialinstitution because of poor credit or the time the regs require,the borrower, under these type of regs, now won't get it from apayday lender either. So they end up worm food because theycouldn't pay the guy.

Similarly, the CFPB applauded the Department of Defense's newrules to update the Military Lending Act. Part of the proposed updates would keepfederal credit unions from making payday alternative loans toservice members as currently permitted by the NCUA. Even the NCUA,whose lush field of regulations includes a payday loan alternativerule, was opposed to the DOD proposal and wrote in favor ofexempting credit unions. The proposal could also cover depositadvance products, auto title loans, and installment loans,including open-ended lines of credit.

Some expect the CFPB to go after overdrafts in the near term,too. And apparently the CFPB is the aphid of the mortgage industry.The regulator's chest is boldly emblazoned with the scarlet W, asit earned the top spot for causing mortgage lenders worry in 2014 following the implementation ofseveral new mortgage regs in January.

Credit unions with the leadership to handle or sidestep theseregulatory landmines, manage employee and member expectations, andadvocate for what they need and what's right will find they haveraised a vibrant garden that produces bushel baskets full ofmembers, loans and hope, for all of the stakeholders.

That is, if they aren't too viciously pruned and overfertilizedby regulators.