SAN FRANCISCO — Members of the Credit Union Economics Group met with officials of the Federal Reserve Bank of San Francisco on April 14 and shared their views on issues and topics currently affecting credit unions.
San Francisco Federal Reserve Bank President Janet Yellen was among the officials at the meeting. CUEG economists discussed the housing market, credit union loan quality issues and the group's economic outlook.
"Credit unions need to let the Federal Reserve know we are not the cause of the current market turmoil and, in many ways, are prudently assisting members every day in their time of need," said Tun Wai, director of research and chief economist at NAFCU. "We continue to stand ready and able to be part of the solution."
Dave Colby, chief economist at CUNA Mutual Group, told the Fed staff, "We have entered a critical period in consumer finance where middle-income, working families risk losing access to reasonably priced credit. The nation's credit unions are working to fill this void, as they always have."
Colby also indicated that if energy prices continue to rise, some consumers will pay even higher energy costs, which could reduce household consumption on other items and
possible dampen the impact of the economic stimulus package.
Bruce Beaudette, president of Sunmark FCU, discussed credit union loan quality, including bankruptcies, charge-offs and delinquencies. He cited legislation currently proposed to prevent predatory mortgage and credit card lending practices, questioning how the restrictions could affect credit unions, which he said already offer member-friendly terms and prices.
Dwight Johnston, vice president of economic and market research at WesCorp, discussed mortgage lending and the current housing market. He reported that while most credit unions avoided the pitfalls in the mortgage lending frenzy, many are feeling the side effects. Members that did take on too much mortgage debt or rapidly adjusting payments are now falling behind on car payments and other debt they acquired from the credit union, he said.
Despite some concern about recent increases in delinquencies, many credit unions are increasing efforts to provide mortgages as competitors are retreating from the market, Johnston told Fed officials. While mortgage refinancing applications are soaring at some credit unions, falling home prices in some markets are resulting in sharply higher rejection rates, he added.
"Credit unions have a great story to tell," said Dave Dickens, executive vice president of asset-liability management for U.S. Central Corporate Credit Union. "They originated mortgage loans to members, either to hold in portfolio or sell to [Fannie Mae] and [Freddie Mac], but not to blindly sell off into securitizations that now have gone so wrong. It's that member-focus that consistently and positively sets credit unions apart."
The San Francisco district is one of 12 Federal Reserve banks nationwide that, together with the Fed's Board of Governors in Washington, serves as the country's central bank. San Francisco serves as headquarters to the 12th Federal District, which includes Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, Washington, Guam, American Samoa and the Northern Mariana Islands.
–msamaad@cutimes.com
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