Super Regulator on the Way

A strategic focus requires that we look at outside forces that may impact our ability to Serve Members’ Changing Financial Needs. Today, one of our most vulnerable areas is the Political & Regulatory climate. Within the next few days we will see history made, with the swearing in of Barack Obama as the 44th President of the United States of America. It is exciting to see history made.

With the big change in the balance of Congressional Power, it is likely that more regulations are on the way. And, I am concerned that a consolidation of regulatory agencies is very likely. I expect to see at least one proposal in the New Year that will suggest something like Homeland Security for Financial Services – a Super Regulator.

At this point there seems to be a split in Congressional focus: “Mortgage Crisis” and “Auto Industry Crisis.” Our political leaders seem determined to blame someone and punish them, as with the S&L Debacle from the 1980s (De-regulation). US Taxpayer money is being directed into the capital accounts of Banks and loans have been extended to the “Big Three” auto manufacturers. Again, more regulation of the financial services industry is on the way.

Oil prices will not be resolved quickly, although world prices have declined by nearly 30%. My guess is that over the next ten years, Americans will move closer to work and drive smaller, more fuel efficient cars.

What’s next?

What are the Strategic Implications for credit unions? Dispite the lack of legislative activity, we must continue to build relationships with our Legislative Delegation at both the Federal and State level. This begins in the local races. With regard to the specific issues mentioned above, we should expect to see an emphasis on mass transit, including light rail. This will take a decade to deal with – it’s strategic. Our members will likely move away from SUVs and buy more fuel efficient (probably hybrid) cars. There should be less Gridlock in Washington. Let’s hope that’s a good thing.

Let me re-emphasize, from the perspective of the financial services industry, and the credit union industry in particular, it is not farfetched that a super-regulator is on the way. This will create a very different environment for our industry. I expect to hear more talk about a Homeland Security type approach to the regulation of financial services. That would likely lead to the end of the NCUA and change the credit union industry in negative ways.

You can see it is not an easy road ahead. But will be challenging to help credit unions continue to make a difference in the lives of Americans.