Many of the new regulations that the Obama administration has proposed will begin shifting banks back to the "old" way of doing business, . . . closer to the way credit unions have always done business.
A side note: When I was a kid, my Dad built our family home. A sticker on the new windows read "Shim the Jamb Plumb" when installing. To me it sounded like a bunch of random words; I even thought it might be a joke. Funny stuff! But, it means you should be sure the window is level at the bottom. Hence the above headline. It's more fun to say "shim the jamb plumb" than that old worn-out sports reference, "level the playing field", am I right?.
Proposed banking rule changes include stricter capital requirements (credit union capital requirements are already more strict than bank's) and a requirement to require originators of asset-backed securities to retain at least a 5% interest in securitized loans. This 5% rule should help "keep in check" the "gunslinger" mentality of banks who made risky loans only to dump them off their balance sheet. Also, due to a FASB rule, banks may soon have to bring billions of these loans, currently held in subsidiary companies, back on to their balance sheet. This and the 5% requirement may have the effect of leveling the playing field (sorry, old habits) by allowing for fewer loans to be booked while still staying within capital limits.
What does all of this mean to the credit union industry? Once the economy begins to heat-up and turn around, credit unions may be in a position to grab some market share back from the banks in our historical "niche", consumer loans. Start forming (improving) great relationships with reputable auto dealers and realtors in your market, it just may pay off in the long run.
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