When I sit down to write, I can’t seem to get too far away from the chaos known as the economy. Because the Credit Union’s well-being and the financial success of our members depend on a good economy, my interest in its success is paramount. Never far away are the thoughts of my own family and the generations of our family tree to follow – how will their standard of living look? Thus, I write.
A fundamental concern of business has yet to be answered. Who wants to hire, borrow, lend, and/or invest when uncertainty prevails? Sadly, this lack of investment by businesses continues to serve as an anchor tied around the economy’s waist.
Uncertainty comes in many shapes and sizes. Taxes and regulation find their way to the forefront in most conversations. I’ve seen them defined as “large, distorting and intrusive.” These descriptive, power adjectives are sadly interchangeable between both taxes and regulation. In either instance, they can be an albatross for a business moving toward expansion. I’ve said it before and I’ll say it again – uncertainty is choking off economic growth. The 2013 Federal Register has 80,000 pages of new rules. UGH!
We have this very concern inside the world of credit unions. Most of you know of the intent of banks to have us pay a federal tax. St. Louis Community Credit Union pays every other tax, but our not-for-profit status allows for a non-payment to Uncle Sam. Banks are livid – not because the small pittance we would pay to the government would pull the economy up from its current malaise. No, not at all. Rather, the approach would hurt the competitive playing field, making credit unions less competitive. Consumers are hurt by less competition. Tilting the playing field is good for banks – not for Joe Six-pack. The point is that this continued uncertainty (as to credit unions being taxed) may slow some of our peers in innovation and investment. Again, the economy suffers.
And regulation – well, that’s out of control. We can’t lend to small businesses beyond an arbitrary cap imposed by government regulation. That’s right – most credit unions cannot have a total business loan portfolio greater than a tiny % of assets. Arbitrary regulation, veiled to protect the integrity of a credit union’s balance sheet, is hurting the economy. Innovation and investment are again stymied. This time, blame it on regulation.
There are pending regulatory changes that, if enacted in their current form, will serve to diminish the lending of money to consumers with less than perfect credit. Without the gory details, just know that if a credit union takes on more risk in their loan portfolio, a corresponding cost to invest more in capital is required. In layman’s terms: credit unions will serve less people who need a help-me-up. The uncertainty of what will come from this proposed regulation will further slow the economy. UGH!!!
St. Louis Community Credit Union sets out every day to serve people that need a help-me-up. Our lending of money to people who have less than perfect credit serves to improve the economy. We are helping consumers to purchase goods and services. Please stop the madness. Regulation and taxes will hurt what credit unions do. Stop it now.