Steven Rick, chief economist for CUNA Mutual Group, drop in long-term interest rates has, in turn, pushed down interest rates for 30-year fixed-rate mortgages.

 CUNA Mutual Group’s latest report said lower interest rates are being driven by the market’s expectations that Americans will take longer to reach herd immunity from COVID-19 than previously expected.

In February, CUNA and CUNA Mutual Group forecast the 10-year Treasury rate would rise from 0.90% in 2020’s fourth quarter to reach 1.50% by this year’s fourth quarter. Its April forecast raised the estimate to 2% by this year’s fourth quarter. Its June forecast showed no change.

CUNA Mutual Group’s Credit Union Trends Report released Tuesday said long-term interest rates have been falling since March 31 when the 10-year Treasury interest rate hit 1.74%. It recently fell below 1.2% — down more than 50 basis points in three months.

Steven Rick, chief economist for CUNA Mutual Group and the report’s author, wrote that the drop in long-term interest rates has, in turn, pushed down interest rates for 30-year fixed-rate mortgages.

Freddie Mac showed the 30-year fixed rate started the year at 2.65%. It rose to a peak this year of 3.18% for the week ending April 1 before receding to 2.78% for the week ending July 22.

“Don’t be surprised if the 10-year Treasury interest rates remain below 2% for the rest of the year and mortgage interest rates remain below 3.25%,” Rick wrote. “Falling interest rates will extend the mortgage refinance boom many credit unions have benefited from over the last year.”

Higher-than-expected refinancings led the Mortgage Bankers Association on July 21 to raise its forecast by 3.1% for total originations for the full 12 months of this year compared with its June 18 forecast. It said it now expects $3.57 trillion in first-mortgage originations this year, down 6.6% from 2020. It started the year expecting a 24% drop.

Rick wrote that bond market trends show many investors believe recent high inflation will be temporary and that inflation will return to the Federal Reserve’s long-run average of 2% when supply chain disruptions get resolved. Investors are more worried that the Delta variant of COVID-19 will lead to low growth and low inflation.

“Falling inflation expectations have also driven down interest rates over the last two months,” he wrote. “The bond market is reducing its anxieties that the economy may overheat in the second half of the year as it appears less likely that the U.S. will reach herd immunity any time soon.”

Members have benefitted from the lower rates, but the mix left in credit union portfolios is generating lower interest margins.

The Trends Report showed credit unions held $537.5 billion in first mortgages on May 31, up 8.5% from May 2020 and up 0.5% from April.

Total loans stood at $1.21 trillion on May 31, up 4.5% from May 2020 and up 0.8% from April. Since December, credit union first mortgage loan balances increased by $12.9 billion, while vehicle loan balances only rose $6.1 billion.

“First mortgage lending has made up the lion’s share of loan growth over the last five months,” Rick wrote.

The report showed new auto loan balances rose 0.5% from April to May, an improvement from the 1.2% drop in May 2020. However, on a seasonally adjusted annual rate, new auto loan balances fell 1.5% in May, extending a string of declines to 23 months.

“The month of May is historically the beginning of the new auto lending season, so we expected a credit union lending turnaround,” Rick wrote.

Car loans accounted for 32.3% of loans in May, the lowest in six years. Higher-yielding unsecured and credit card loan balances made up 9.4% of all loan balances in May, the lowest in credit union history.

“This is one of the factors pushing credit union yield-on-asset ratios to record lows this year,” he wrote.

A new website, StopRansomware.gov, has been designed to be a one-stop shop where individuals, businesses and other organizations can find resources to help mitigate their ransomware risk.

WASHINGTON—Federal agencies are stepping up their efforts to help public- and private-sector organizations protect themselves from attack.

A new website, StopRansomware.gov, has been designed to be a one-stop shop where individuals, businesses and other organizations can find resources to help mitigate their ransomware risk.

Launched July 15 by the departments of Justice, Homeland Security and other federal partners, the site consolidates ransomware information from all federal agencies, “reducing the chances organizations miss important information on the latest ransomware-related alerts and threats from DHS’s Cybersecurity and Infrastructure Security Agency, the Secret Service, the FBI, the Department of Commerce’s National Institute of Standards and Technology, and the Departments of the Treasury and Health and Human Services,” according to the government and GCN.com.

Simple Steps

The Justice Department further said StopRansomware.gov aims to help organizations take simple steps to protect their networks and respond to ransomware incidents, while providing enterprise-level IT teams the technical resources to reduce their ransomware risk.

The site also includes the latest news and alerts as well as clear guidance on how to report attacks, isolate and triage affected systems and contain and mitigate the impact.

In addition, it features a section for state, local, tribal and territorial governments listing no-cost services – such as self-assessments and training – they can use to guard against ransomware and attacks against election infrastructure, GCN.com added.

Compensation Increased for CU Execs Last Year

MADISON, Wis.—The COVID-19 pandemic stalled much of the economy, but it didn’t hurt the take-home pay and other benefits paid to credit union executives.
According to CUES’ new Executive Compensation Survey, base salary, base salary plus bonus, and total compensation packages increased last year across credit unions.

CUES said other key findings from this year’s report include:

• Median total compensation increases ranged from 3.2% for senior CUSO Executives to 6.9% for chief executive officers
  
  
• Average total compensation increases ranged from 3.4% for e-commerce executives and chief financial officers to 6.8% for chief executive officers
  
  
• More than 20% of CEOs have the Certified Chief Executive designation, which is earned by completing CUES’ CEO Institute program
  
  
• The top four factors which determined CEO bonuses were board evaluation, earnings, loan growth, and membership growth

All of the data is available in CUES Executive Compensation Survey and/or CUES Employee Salary Survey, which were open for participation from Jan. 1 to April 16.

NAFCU Chief Economist Curt Long on Friday said he expects sales will remain strong for the rest of the year, but will remain limited by availability and affordability.

The National Association of Realtors reported sales of existing homes in June showed their first month-to-month gain since January, and said it expects feverish price gains will start to ebb later this year.

Existing homes sold in June at a seasonally adjusted annual rate of 5.86 million units, 1.4% higher than in May with sales flat in the South, but up in all other regions. Sales rose 22.9% from June 2020 with double-digit gains in every region.

NAFCU Chief Economist Curt Long on Friday said he expects sales will remain strong for the rest of the year, but will remain limited by availability and affordability.

“Demand is ebbing somewhat from its frenzied levels of earlier this year, but that is only encouraging buyers who sat out the rush to re-enter the market,” Long said. “A further improving economy and raising wages will also boost sales into the medium and long term.”

The unadjusted median existing-home price rose from $350,400 in May to $363,300 in June, up 23.4% from a year earlier with prices jumping in every region.

The “median price rose to a new all-time high as demand continues to force prices upwards,” Long said. “Mortgage rates have been heading lower, boosting demand and remaining only 23 basis points higher than the all-time low set in January.”

NAR Chief Economist Lawrence Yun said the rate of home sales continues to run above pre-pandemic levels.

“Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” Yun said.

“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”

First-time buyers accounted for 31% of sales in June, unchanged from May but down from 35% in June 2020. Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in June, down from 17% in May and up from 9% in June 2020.

Buyers paid all cash on 23% of transactions in June and May, up from 16% in June 2020.

“Huge wealth gains from both housing equity and the stock market have nudged up all-cash transactions, but first-time buyers who need mortgage financing are being uniquely challenged with record-high home prices and low inventory,” Yun said. “Although rates are favorably low, these hurdles have been overwhelming to some potential buyers.”

 

Jim DuPlessis CUTimes

New Legislation Could End 'Archaic' FOM Restrictions for Credit Unions

On Wednesday, members of the House Financial Services Subcommittee met to discuss the merits of the proposed Expanding Financial Access for Underserved Communities Act to find possible solutions to the unbanked problem in the United States.

According to letters sent to the committee by NAFCU and CUNA, the legislation under consideration is supported by both organizations. In it, the legislation would give federal credit unions the ability to expand their field of membership (FOM) by adding underserved areas. Current regulation only allows multiple common bond credit unions to take this action.

“As Congress grapples with ways to ensure that underserved and unbanked populations have access to affordable financial services, credit unions want to be able to help,” NAFCU’s vice president of legislative affairs, Brad Thaler, wrote. “Unfortunately, many credit unions are limited by the restriction on adding underserved areas to their FOM. One area where this legislation would be extremely helpful is in rural areas.”

In a letter from CUNA President/CEO Jim Nussle, he stated that this legislation would make three important changes to the Federal Credit Union act “to enable and encourage credit unions to serve underserved and abandoned communities and promote financial inclusion to all at no cost to the taxpayer.”

Those three items include:
Allowing credit unions to expand their FOM to include underserved communities;
Exempting business loans in underserved areas from the member business lending cap; and
Expanding the definition of an underserved area to include any area more than 10 miles from the nearest financial institution branch.

According to a survey completed earlier this year by the FDIC, more than 6% of households in the U.S., or 14.1 million adults, are unbanked.

“Credit unions are proud to be at the forefront of efforts to expand financial services access to rural areas, many of which are underserved, and want to do more,” Thaler’s letter stated. “However, not all credit unions can add underserved areas to their field of membership, making it challenging for some to expand in rural areas. We urge the Committee to support this draft legislation that would allow all types of credit unions to add underserved areas and make it easier to make critical member business loans to small businesses in those areas.”

Nussle made a similar point in his letter to committee members. “Rather than create a new government program or increase federal spending, reforming archaic field of membership restrictions through the Expanding Financial Access for Underserved Communities Act is a market-based solution leveraging the success of the credit union model. This legislation breaks down barriers that keep credit unions from being part of the solution to address financial access for underserved and unbanked communities.”

Committee members appeared to be polarized on the issue. Overall, Democrats asked those testifying how they could help turning the unbanked into banking consumers. Republican members believed this legislation was a bad idea since, for instance, online banking was already widely available and they did not want to add more government oversight.

Did you know that 95% of cybersecurity breaches are caused by human error?

Join OMNICOMMANDER’s Cybersecurity Team on a complimentary 1-hour live training to learn how your credit union employees can protect your assets and member data from cybercriminals and ransomware attacks.

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INTERPOL Warns of a Pending ‘Ransomware Pandemic’

LYON, France—The world’s largest police organization is warning that a marked rise in the number of ransomware attacks is coming.

INTERPOL Secretary General Jürgen Stock urged police agencies and industry partners to work together to prevent what looks like a future “ransomware pandemic.”

Stock said the best tactic to disrupt a seemingly never-ending stream of ransomware attacks is to adopt the same international collaboration strategy used when fighting organized crime and terrorism, Bleeping Computer reported.

"Despite the severity of their crimes, ransomware criminals are continuously adapting their tactics, operating free of borders and with near impunity," Stock said during the INTERPOL High-Level Forum on Ransomware.

"Much like the pandemic it exploits, ransomware is evolving into different variants, delivering high financial profits to criminals,” Stock continued. “Ransomware has become too large of a threat for any entity or sector to address alone; the magnitude of this challenge urgently demands united global action which INTERPOL can uniquely facilitate as a neutral and trusted global partner."

Curt Long NAFCU - What is the ‘New Normal’ After COVID in Field of Economics?

ARLINGTON, Va.–There’s been no shortage of discussion and debate around all the “new normals” created by the coronavirus pandemic. But what about the field of economics? What kinds of new thinking about economic metrics has the long shutdown of much of the world’s economy meant?

“There are some things I think are still in flux and that haven’t been fully calcified,” said NAFCU’s chief economist,” Curt Long. “I think the biggest one of those is fiscal stimulus. As we look ahead to episodes of economic downturns, the experience during COVID provided a lot of evidence in midst of a real economic crisis that economic stimulus is a very, very powerful tool to support an economy.

“But there are also a lot of side-effects to take to into account. The way inflation shapes up in the next six months may have a lot to say about what do in next crisis and using the level of economic stimulus in the ways we did,” Long continued. “It has potential implications for non-crisis times, as well. The child payments right now seem to be very popular.”

About Inflation

In addition to all the discussion and reporting around various other new normal, inflation has been getting just as much attention, perhaps even more in recent months.

“But does all that discussion of inflation become a self-fulfilling prophecy by contributing to inflation?

“I have had lots of conversations with just friends and family who don’t even have a toe in economic waters,” acknowledged Long. “I do think inflation is working partly through the expectations channel. When consumers and especially businesses expect inflation, it effects their pricing discussions.”

Some of the “chatter” around inflation may contribute to inflation picking up, said Long, but not in any significant way.

 

Fed Chair Says Inflation To Hang Around a Bit Longer; New Beige Book Data Show Why

WASHINGTON–The chairman of the Federal Reserve told the House the current increase in inflation is temporary, although it will remain elevated in the months ahead before moderating.

Fed Chairman Jay Powell’s comments before Congress came on the same day the Fed released its Beige Book analysis, which found an economy showing increasing strength, but also suffering shortages of many materials and manpower.

During his testimony before House Financial Services Committee as part of his semiannual monetary policy report to Congress, which he will repeat today before the Senate, Powell said asset valuations have generally risen as the economy has improved and investor risk appetite has grown.

“Household balance sheets are, on average, quite strong, business leverage has been declining from high levels, and the institutions at the core of the financial system remain resilient,” Powell said.

What About Inflation?

As for inflation, which is of concern to many Americans who have faced rapidly rising prices, Powell agreed it has “increased notably” and will likely remain elevated in the months ahead before moderating.

“Inflation is being temporarily boosted by base effects, as the sharp pandemic-related price declines from last spring drop out of the 12-month calculation,” Powell testified. “In addition, strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind. Prices for services that were hard hit by the pandemic have also jumped in recent months as demand for these services has surged with the reopening of the economy.”

Powell further said the Federal Open Market Committee (FOMC) is seeking longer-term inflation expectations that are “well anchored at 2%” to avoid long periods of low or high inflation. 

“Measures of longer-term inflation expectations have moved up from their pandemic lows and are in a range that is broadly consistent with the FOMC’s longer-run inflation goal,” he said.

Powell offered no forecast directly related to the future direction of rates.

Beige Book Data

Meanwhile, the Fed’s newest Beige book data indicate what most everyone recognizes, which is the U.S. economy is recovering quickly, but the recovery is being restrained by widespread shortages of labor and supplies.

While the economy has made lots of progress, Powell indicated during his testimony that it stills needs a lot of support from the Fed. As evidence, he  pointed to the millions of people still being out of work.

“The U.S. economy strengthened further from late May to early July, displaying moderate to robust growth,” the Beige Book said. 

The biggest problem for the economy right now is the inability of businesses to keep up with the crush of demand, according to the Beige Book analysis. “Supply-side disruptions became more widespread, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods,” the survey said.

The Beige Book pointed to strong demand for a variety of goods and services, including new and used cars, travel and tourism. Most industries were also growing rapidly.

The July Beige Book covered the period from late May to July 2. 

Unlikely to Ease Off Throttle

“The Beige Book mirrored Chairman Powell’s comments before Congress of a growing belief that inflationary pressures may last longer than once believed,” said NAFCU’s chief economist and VP of research, Curt Long. “Ongoing shortages in labor and materials are frustrating hopes that the economy would quickly return to normal. However, with the labor market still far from full employment, the Fed is unlikely to ease off the throttle.”

 

NCUA Announces Plans to Return to On-Site Exams

ALEXANDRIA, Va.–NCUA said it is now prepared to move into the first phase of resuming onsite operations in some areas of the country.

In Letter to Credit Unions 21-CU-06, NCUA Chairman Todd Harper said the agency consulted with its public health consultant before deciding it would begin returning to the on-site exams.

“As part of Phase 1, NCUA staff and contractors will be permitted to volunteer to work on-site beginning July 19, 2021,” the letter states. medium“During Phase 1, staff may only volunteer to work onsite in locations where public healthdata indicates pandemic conditions have sufficiently moderated.

“To the extent they exceed the NCUA’s safety protocols for Phase 1, NCUA staff working onsite in credit unions will generally be expected to follow credit union policies related to safety and security,” the letter continues. “To the extent possible, the NCUA will respect a credit union’s preference to not have examination staff onsite during this phase. However, the NCUA reserves the right to conduct onsite work at a credit union if necessary to address a serious and time-sensitive matter.”

Harper said the agency will also continue to maintain heightened safeguards in its own facilities to ensure the health and safety of staff and any visitors and will further continue to monitor the course of the pandemic and adjust its plans as necessary to ensure staff safety, while continuing to ensure the safety and soundness of the credit union system and protect CU members.

SRM consulting company said it expects a flood of pandemic-delayed mergers this year.

A Memphis consulting company said it expects a flood of pandemic-delayed mergers this year among banks and credit unions.

“Mergers delayed due to the pandemic are now in full force and more complex,” according to a report Monday from Strategic Resource Management, Inc. (SRM).

The consulting company cited data from S&P Global Market Intelligence showing mergers postponed by the COVID-19 pandemic are extending to regional and super-regional banks holding $10 billion to $1 trillion in assets.

“We expect to see even more mergers among these banks in the coming months, which will continue to impact competition in the marketplace,” the SRM report said.

The S&P report released July 8 showed no credit unions met the $314 million threshold for the 20 largest deals announced from January 2020 through June 2021.

However, three credit unions made S&P’s list of the 20 “most expensive” deals over the same 18-month period. The deals are ranked by the value of the deal as a percent of tangible common equity, which measures how much shareholders would receive in liquidation. It is book value minus intangible assets (including goodwill) and preferred equity.

First on the list was Region Financial Corp.’s June 8 announcement that it plans to acquire EnerBank USA of Salt Lake City for $960 million, or 306% of its tangible common equity, and 35% of its deposits. The three credit unions making the list were:

• No. 9. The June 16 announcement by Lake Michigan Credit Union of Grand Rapids, Mich. ($10 billion in assets, 406,861 members) that it plans to acquire Pilot Bancshares Inc. of Tampa, Fla., for $99.9 million, or 187% of common tangible equity and 19% of deposits.
  
  
• No. 12. The March 31 announcement by VyStar Credit Union of Jacksonville, Fla. ($10.7 billion in assets, 764,701 members) that it plans to acquire Heritage Southeast BanCorp Inc. of Jonesboro, Ga., for $194.4 million, or 183% of common tangible equity and 14% of deposits.
  
  
• No. 15. The April 2020 announcement by Tinker Federal Credit Union of Oklahoma City ($5.6 billion in assets, 425,298 members) that it planned to acquire substantially all of the assets and operations of Prime Bank of Edmond, Okla., for $68 million, or 180% of common tangible equity and 28% of deposits. The deal was completed later that year.

In June alone, 26 deals were announced, the highest monthly tally since September 2019 when 27 deals were announced, according to the S&P report.

In the first half of 2021, 94 deals were announced, including five banks being acquired by credit unions. Fifty deals were announced in the first half of 2020, and 112 for the entire year, including six by credit unions.

The value of deals in this year’s first half was $32 billion, up from $27.8 billion for all of 2020. Half of deals announced in the first half came in with a value-to-tangible common equity ratio 152% or more, compared to a median ratio of 134.8% last year.

Of the 20 largest deals announced in the first half, three were announced in June. Similarly, June alone accounted for a quarter of the 20 most expensive deals announced since the beginning of 2020.

Jim DuPlessis CUTmes

 

 

Americans are borrowing again!

NEW YORK—Americans are borrowing again, in some cases at levels not seen in more than a decade.

Consumer demand for auto loans and leases, general-purpose credit cards and personal loans was up 39% in April compared with the same period last year, according to Equifax. It was also up 11% compared with April 2019.

As CUToday.info reported here, Fed data confirm the increase in consumer credit, as well as credit unions’ growing share of the market.

Equifax said lenders bumped up credit card originations, issuing more general-purpose credit cards than any other March on record. Equifax’s data goes back to 2010.

The company further reported lenders extended a record number of auto loans and leases in March, the latest month for which data are available. They also bumped up credit-card originations, issuing more general-purpose credit cards than any other March on record. Equifax’s data goes back to 2010.

“It is quite the reversal from 2020, when many people shunned credit cards, personal loans and other types of debt,” the Wall Street Journal observed.

President's Executive Order Calls for Action on Financial Mergers, Ability of Consumers to Switch FIs

WASHINGTON–President Biden’s recent sweeping executive order aimed at increasing competition includes a number of provisions related to financial services.

Among those provisions are orders the Department of Justice and agencies responsible for banking to update guidelines on banking mergers "to provide more robust scrutiny of mergers," and further encourages the Consumer Financial Protection Bureau to issue rules that will allow bank customers to withdraw their data to make it easier to switch banks.”

The details on what precisely both of those directions mean have not yet been provided and will most likely need to be hammered out by the respective agencies involved. Moreover, such Executive Orders often go no further than to “encourage” various institutions to take actions without specifically requiring specific steps.

The Biden Administration has cited concerns over the disappearance of bank branches in many communities that have created so-called “banking deserts.” The lack of branches typically affects rural communities, low-income communities and communities of color, and are often the result of mergers.

Other Provisions

Financial services is by no means the only entities affected by the Executive Order on competition. Among other things it would:

• Make it easier for generic-drug makers and Canadian providers to compete with U.S. pharmaceutical companies
  
  
• Allow Americans to buy hearing aids without a prescription (the New York Times noted a 2017 law — signed by Donald Trump — called for that, but it still has not happened)
  
  
• Require hospitals to be more transparent about billing
  
  
• Force airlines to refund money when they lose bags or when the in-flight Wi-Fi doesn’t function
  
  
• Make sure that farmers can repair their own equipment or choose who repairs it, rather than allowing manufacturers to dictate who can
  
  
• Increase federal scrutiny of tech companies’ mergers and their use of consumer data
  
  
• Restrict non-compete clauses

FHFA Sends Letter to FHLBs With Warning on LIBOR Alternatives

WASHINGTON–The Federal Housing Finance Agency (FHFA) has sent a letter to the Federal Home Loan Banks cautioning that some of the alternatives being proposed for the soon-to-expire LIBOR may pose safety, soundness and reputational risks.

The letter from FHFA Deputy Director Andre D. Galeano to the presidents and CFOs of the FHLBs notes that in recent months “several organizations in the marketplace have announced or introduced other potential alternative reference rates that may be inconsistent with established principles for an acceptable reference rate.”

LIBOR, the London Interbank Offered Rate, is no longer to be offered for use with new contracts and will be phased out completely for existing contracts by June 2023.

Galeano wrote that FHLB use or adoption of the alterative rates “may significantly pose the same safety and soundness and reputational risks that befell LIBOR.”

SOFR Cited

Instead, stated Galeano, the alternative rate developed by the Federal Reserve, the Secured Overnight Financing Rate (SOFR), is “an appropriate and well-accepted replacement” for LIBOR. He pointed to the “alacrity” at which FHLB system has moved away from LIBOR to SOFR and also issued a warning.

“To this end, DBR (the FHFA Division of Bank Regulation) does not believe the (FHLB) System should experience recidivism in adopting and using alternative reference rates that have shortcomings similar to those of LIBOR and other recently discontinued or soon to be discontinued reference rates,” he wrote.

The June jobs report was a solid one, says NAFCU's Curt Long

WASHINGTON—The new employment numbers released last week, which showed a surge in hiring, are being described as “solid” by one economist.

Curt Long

The Bureau of Labor Statistics reported non-farm payrolls increased by 850,000 in June, and the unemployment rate rose slightly to 5.9%. Of note, May's number was revised up slightly to a gain of 583,000.

"The June jobs report was a solid one, in line with expectations," said NAFCU Chief Economist and Vice President of Research Curt Long. “Monthly growth was the strongest since last summer's reopening, but a significant portion of the gain came from education payrolls as fewer teachers left their jobs at the end of the school year. While those positions add to the job gain totals, they do not affect the number of employed workers, which is one source of the discrepancy between strong job growth last month and an unemployment rate that failed to budge.”

Average hourly earnings rose 10 cents in June. Year-over-year wage growth was 3.6%. The labor force participation rate was unchanged at 61.6%, which is still down significantly from 63.3% in February 2020.

Leisure & Hospitality Again Leads

Results among the major industries was mostly positive. Leisure and hospitality gained 343,000 jobs, followed by 188,000 gained in government, mostly driven by teacher hiring, and a gain of 72,000 jobs in professional and business services.

"Leisure and hospitality also posted another strong gain, which was to be expected with broader reopening of in-person services. Average hours worked remains elevated but has now ticked down for two consecutive months, so perhaps some of the staffing shortages are beginning to abate," concluded Long. "Progress is happening but it remains slower than the optimists had hoped. With inflation fears beginning to subside, Federal Reserve officials are likely to emphasize that it will be a long road ahead before it considers tightening policy."

Fed Reserve Releases CECL Tool For Smaller Institutions (And ‘Smaller’ Is Relative)

WASHINGTON–The Federal Reserve has released a new tool it said is aimed at helping smaller banks calculate their allowances under the new current expected credit loss (CECL) accounting standard. 

According to the Fed, the new spreadsheet-based tool is called the “Scaled CECL Allowance for Losses Estimator” (SCALE). The Fed said it draws on publicly available regulatory and industry data to aid community banks with assets of less than $1 billion.

The CECL accounting standard took effect for most public financial institutions in 2020, but smaller banks are not required to meet the standard, the same date most credit unions have to comply following the adoption of a recent rule by the NCUA board.

The Fed said SCALE will be officially launched July 15 in conjunction with a webinar during which it will answer questions about the new tool. The event will feature representatives from the Financial Accounting Standards Board and the Conference of State Bank Supervisors (CSBS).

Registration is available at AsktheFed.org.