Now, however, we have an incoming president who has made it abundantly clear that he wants control of the Fed. In fact, a few weeks ago, he stated that a crisis with the Fed may be inevitable. This unprecedented uncertainty about who ultimately controls monetary policy doesn’t lend itself to a stable bond market, but the situation could be even more unstable if a more politically sensitive Fed lowers interest rates, irrespective of the economic environment. The bottom line is this: In the pre-COVID world, life was fairly simple. The Fed controlled interest rates and kept inflation at bay. Washington’s policies had little impact. Then came an enormous amount of government stimulus. Now, we are in an era where fiscal policy will continue to impact interest rates and inflation independent of what the Fed does. This will make it much more difficult to guess right on the kind of investments to make and anticipate consumer demand. Don’t take my word for it; the chart below shows how volatile the market yield for 10-year U.S. Treasury securities has been since the election.

Less Regulation, But With A Populist Twist?

CFPB Director Rohit Chopra has been ruthlessly effective in demonstrating what an incredibly powerful institution the CFPB is. By “aggressively” interpreting both the Dodd-Frank Act and the Bureau’s UDAAP powers, he has made overdrafts an honorary four-letter word and given a roadmap to plaintiff’s lawyers who are bringing an ever-increasing number of class-action lawsuits against credit unions of all sizes. With a Republican in charge of the Bureau, we can rest assured that any attempts to gut federal arbitration law or the use of opinion letters with the force and effect of regulations will go into hibernation.

Instant Insights /

5 Ways the Trump Administration Is Going to Affect Credit Unions

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