Rate hikes remain off in the distance, according to Fed Chairman Jerome Powell.

JACKSON HOLE, Wyo.–The Federal Reserve is likely to begin withdrawing some of its easy-money policies before the end of the year, but any rate hikes remain off in the distance, according to Fed Chairman Jerome Powell.

Speaking virtually to the Fed’s annual Jackson Hole symposium, Powell said the U.S. economy has now arrived at a point where it doesn’t need as much support from the central bank.

As a result, the Fed is likely to begin reducing the amount of bonds it purchases each month before the end of the year, provided the economic recovery continues. The so-called “tapering” could begin as soon as the Fed's Sept. 21-22 meeting, according to analysts. The Fed has been buying $120 billion in bonds every month since the onset of the pandemic to minimize any economic dip.

For many Fed watchers, including credit unions, the “tapering” decision has been closely watched, as it should mean an increase in rates. But that’s not necessarily the case, said Powell.

"The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test," Powell said in prepared remarks to the event.

Powell noted that while inflation is already at the Fed's 2% target rate, "we have much ground to cover to reach maximum employment," which is the -piece of the central bank's dual mandate and necessary before rate hikes happen.

Concern Over Inflation

With consumers seeing higher prices on many items, inflation has been getting significant attention, and Powell devoted extra time in his remarks to explaining why he continues to believe the current inflation rise is transitory and will drop eventually to the target level.

While many have called on the Fed to act, Powell emphasized the importance of the central bank not making an "ill-timed policy move" in response to economic conditions he described as temporary.

"Today, with substantial slack remaining in the labor market and the pandemic continuing, such a mistake could be particularly harmful," he said. "We know that extended periods of unemployment can mean lasting harm to workers and to the productive capacity of the economy."

‘Near-Term’ Risk

Powell said the Delta variant of COVID "presents a near-term risk" to getting back to full employment, but he also believes "the prospects are good for continued progress toward maximum employment."

"Inflation at these levels is, of course, a cause for concern. But that concern is tempered by a number of factors that suggest that these elevated readings are likely to prove temporary," the Fed chairman said..

Economist believes it’s pretty safe to assume next year will be much like this year

ARLINGTON, Va.–For credit unions headed into their Fall planning sessions for 2022 and beyond, one economist believes it’s pretty safe to assume next year will be much like this year—unless some sort of new COVID variant emerges.

For CFOs and ALCOs, NAFCU’s chief economist, Curt Long, pointed to last week’s Federal Reserve virtual meeting from Jackson Hole, Wyo., where Fed Chairman Jerome Powell signaled he does not expect rates to move very much, at least on the bottom end. Powell has consistently said he does not anticipate the Fed will take action on rates until late 2022 or 2023.

“We may see some steepening of the yield curve,” said Long. “This year has been a little disappointing in terms of where we started in that regard. I think we have been getting mostly positive economic data. As the Fed has successfully kept rates low on short end, there is some room for rates to move up on the long end.”

For credit unions doing their planning, Long expects the economy will continue to add jobs and to see the resulting growth. The only potential bump in the road, according to Long, would be a turn in the COVID pandemic.

“I expect 2022 to be a lot like 2021,” said Long. “Obviously, COVID is still presenting credit unions with a lot of uncertainty. Economically, things should be a little more stable unless we get a really strong bout from a new variant. I do not expect to see the kinds of broad shutdowns (seen during the initial wave of COVID).

Lending Projections

As CUToday.info reported here, in its most recent Trends Report CUNA Mutual’s economists are projecting 8% loan growth over the next two years. Long says he largely agrees.

“I think 8% is mostly in the range,” Long said. “Lending has been slowing lately. We see that in a few areas, specifically autos, but it’s mostly a supply issue there. I’m not sure that is going to resolve anytime soon, and we will get into 2022 before we see inventory levels returning. So, that could be a headwind for the next six to 12 months. The housing market will continue plugging along. And consumer spending and revolving debt not yet back to trend, but they are making a lot of headway.”

BROOKFIELD, Wis.– Omnichannel commerce trends that emerged and accelerated during the COVID-19 pandemic are showing their staying power, according to a new Carat Insights report released by Fiserv.

The company said the data show commerce experiences that blend the physical and digital are increasingly popular among consumers, digital spending has increased across verticals throughout the pandemic, and in-store payments made digitally are gaining share.

According to Fiserv, Carat Insights represents a cross section of data measuring consumer perceptions toward emerging payment trends, and how actual consumer spend has evolved in market. The Carat Insights survey polled 2,200 U.S. adults to explore how the pandemic impacted consumer payment preferences. In addition, Carat Insights analyzed spending data from Q1 2020 through Q2 2021 at businesses leveraging Carat, the Fiserv omnichannel commerce ecosystem that processes more than one-billion omnichannel transactions each year.

Omnichannel Spend Growing Across Industries

Fiserv noted industries such as restaurant, grocery, and retail adapted during the pandemic by adopting new digital payment experiences that connect eCommerce to a retailer’s physical footprint, such as Buy Online Pick-up In-Store (BOPIS).

Among the related findings:

• More than half (60%) of consumers surveyed said they have used BOPIS at a restaurant, 48% at a retailer, and 44% at a grocer in the preceding month
• Omnichannel spending encompassing a mix of online and in-store business models grew substantially year-over-year, with increases of omnichannel spend seen in verticals including restaurant (77%), grocery (71%), and retail (39%)
• Confidence in Travel & Entertainment (T&E) is gaining strength, and omnichannel spending has now surpassed pre-pandemic levels by 5%. Much of this is due to spending increases in the airline and in-person dining segments

Evolving Payment Preferences

As consumers have sought safer and more seamless ways to pay during the pandemic, Fiserv said they also shifted the manner in which they prefer to transact, with contactless payment, digital wallet, and debit usage all continuing to accelerate.

Among the related findings:

• Contactless in-store payments grew by 450% year-over-year, reaching a 5% in-store market share as consumers increasingly prefer touchless payment interactions and businesses enable them.
• Use of digital wallets online increased 394% year-over-year, giving digital wallets 4% market share online compared to only 1% pre-pandemic.
• Debit is now the preferred payment method for consumers spending online, growing 50% year-over-year compared to 5% growth for credit. Debit growth is driven by millennial and Gen-Z populations shopping for staple goods online.

Buy Now Pay Later (BNPL) and QR Codes

As CUToday.info has reported, advanced payment methods like Buy Now Pay Later (BNPL) and QR codes are providing businesses and consumers new ways to think about payments.

“But awareness and usage don’t align to conventional expectations,” Fiserv said.

Among the related findings:

• 32% of high-income consumers have used BNPL compared to 24% of middle-income consumers, demonstrating that BNPL adoption is not driven primarily by lack of credit card access or financial difficulty, but by preference for a useful short-term financing option.
• 76% of consumers are aware of QR codes for payment, but only 26% have scanned a QR code to pay. Adoption is likely to increase when QR codes move beyond one-dimensional value and integrate concepts like customer identification, marketing, returns management, and loyalty.

Do you remember the Commodore 64 computer?

Do you remember the Commodore 64 computer? My grandparents had one when I was growing up. I remember the floppy discs you had to swap in and out when playing a game or working on a program, printing my school reports on the dot matrix printer. I remember being amazed at what it could do. Flash forward to today and I look at the iPad and tablet-based devices with Bluetooth and wi-fi connectivity, touch screens, etc. Technology has advanced at an exponential rate in the past few decades.

The ATM is seeing that same technological advancement. It wasn’t that long ago that envelope deposit was amazing new tech. Now we see new ATMs with features like video teller, contactless card usage, etc. As ATM experts, we help our credit unions plan, develop, and implement these new ATM technologies. Although these ATM advancements are critical for success, we’re seeing this growth in technology outpace the ability of credit union staff.

Although it’s not the core competency of the credit union to be the ATM expert, the credit union is dependent upon ATM technology to help support and ultimately facilitate its strategy and growth.

We are seeing an increase in technology adoption at the ATM. Many of our clients and soon-to-be clients are asking us about these new technologies and making it part of their 2-to-5-year growth strategy. As an example, our deployments for new clients that include automated deposit have skyrocketed. It was only a few years back when many of our credit unions were choosing to eliminate deposits and stick with basic cash dispensing functionality at the ATM.

Likewise, the ITM, VTM, PTM (pick your acronym) discussions are growing in frequency. Many clients are choosing to deploy ATMs that are prepped or capable of an ITM upgrade. But they have yet to make the investment in the full upgrade or integration. This is the perfect strategy for a credit union that has to replace their ATMs due to software requirements or age but are not fully certain what the future direction is for their ATM technology.

Whatever your situation, there is an ATM strategy that fits your needs. At Dolphin, we work with each client to design an ATM program that makes sense for the credit union and their members. Just like your member base, every ATM location is unique. We understand that this uniqueness is what sets your credit union apart.

ATM strategy continues to grow as an integral part of the branch transformation conversation in this “digital age” and should be top of mind for your team. Adding Dolphin as a partner gives your institution an “ATM department” that will cut costs, streamline operations, free up core staff, and ensure strategies are in place for future enhancement and technology upgrades.

Joe Woods, CUDE
SVP, Marketing & Partnerships
jwoods@dolphindebit.com
 

Credit Union Lending Picks Up in Most Areas

Credit unions were increasing their portfolios in most areas in June, except business lending and new car loans, where portfolios fell for the 24th month in a row after seasonal adjustments, according to a CUNA Mutual Group report released Tuesday.

The Madison, Wis., trade group’s Credit Union Trends Report showed new auto loan balances were $141 billion on June 30, falling at a 3.3% seasonally adjusted, annualized rate from May to June, part of the May-through-October peak car-buying season.

Credit unions held $252.4 billion in used car loans on June 30, up 1.2% from May without seasonal adjustments.

The Trends Report made slight adjustments to CUNA’s Monthly Credit Union Estimates released earlier in the month. In this case, its changes allowed total auto loan balances to show a slight 0.3% un-adjusted May-to-June gain, compared to being flat in the CUNA report.

Steve Rick, chief economist for CUNA Mutual Group and the report’s author, said gains were stronger in other areas, including credit cards and home loans.

Credit union loan balances grew at a 5.9% seasonally adjusted, annualized rate in June, which Rick said is better than the 4.9% pace set in June 2020 “during the worst of the economic crisis,” but still below the 7% long-term average. Over the long run, credit union loan balances have risen on average 7% per annum.
“Credit union loan growth is finally on the upswing as the economy reopens and vaccination rates improve,” Rick said. “We are forecasting above trend credit union loan growth for the next two years (around 8%) as the economy resumes its normal growth, pent up demand is satiated and infrastructure spending kicks in.”

That’s a slight change from the last CUNA-CUNA Mutual Group forecast in June that forecast 5% annual growth in loan balances for 2021 and a 9% gain in 2022.

The Trends Report showed credit card balances rose at a 2.2% seasonally adjusted annualized rate from May to June, which Rick said was the first seasonally adjusted gain since October 2019.

“Rising gas prices, consumers venturing out again and spending on services will keep credit card loan growth in the positive territory for the remainder of the year,” he said.

Mortgages have continued to be the strongest area of growth. Credit unions held $547.9 billion in first mortgages on June 30, up 1.9% from June and up 8.9% from a year earlier, without seasonal adjustments.

Credit unions had 4.8% of the nation’s first mortgages in their portfolios as of June 30, up from 4.7% as of March 31 and 4.6% as of June 2020. Strategy is a major driver of those shares, which are based on totals from the Mortgage Bankers Association. While credit unions have been selling more of their mortgages in the past year, they still tend to hold a higher percentage in their portfolios than other lenders.

Measured by origination's, credit unions have been losing share. Data from Callahan & Associates and the Mortgage Bankers Association showed that credit unions originated $80.9 billion in first mortgages in the second quarter, or 7.7% of the $1.05 trillion in origination's by all lenders.

Rick said credit union loan quality continues to improve, with low charge-offs and a 60-day delinquency rate of 0.44% as of June 30, well below the 0.75% that has been considered the “natural” delinquency rate.

“The improving labor market is a major factor pushing the credit union loan delinquency rate to the lowest level in more than 25 years,” Rick said. “Also contributing to the very low loan delinquency rates were credit union low forbearance programs, lower interest rates that helped consumers lower their debt servicing costs, enhanced unemployment benefits and stimulus checks.

“And finally, most job losses occurred in the service sector among low income jobs,” he said. “Since low income workers typically can’t obtain a large amount of debt, and if they did run into financial difficulty, they didn’t have a large amount of debt to become delinquent.”

Rick also predicted the number of credit unions would fall by 189 this year, up from the 143 lost in 2020. CUNA estimated 5,530 credit unions were in operation as of June, three fewer than in May and 154 fewer than in June 2020.

The gulf between large and small credit unions was reflected in their asset averages and medians. The average asset size of a credit union was $381.2 million in June, up “a remarkable 22% from a year ago,” Rick said. Meanwhile, half of credit unions held less than $46.5 million in assets in June, a median that is 24% higher than a year earlier.

“The trend toward industry consolidation and bigger credit unions is only likely to accelerate due to the benefits of greater economies of scale, higher productivity and larger earnings that are all achieved with a larger asset base,” Rick said. “Larger, more efficient credit unions will also raise the barrier to entry for new, small credit unions.”

Jim DuPlessis CUTimes

 

NAFCU Chief Economist Curt Long said Monday he expects existing home sales will remain steady this year, limited mostly by supply.

His comments came after the National Association of Realtors (NAR) reported that existing home sales rose 2% from June to July to a seasonally-adjusted annual rate of 5.99 million homes.

“Existing home sales rose for the second month in a row fueled by low rates and a recovering job market,” Long said. “Demand is very strong and although supply is still tight, homebuilding has picked up.”

The NAR report showed sales of single-family homes, townhomes, condominiums and co-ops in July were 1.5% higher than in July 2020.

There were 1.32 million homes on the market July 31, up 7.3% from a month earlier and down 12% from a year earlier. The supply of unsold homes would last 2.6 months at the present sales pace, up slightly from June’s 2.5-month inventory but down from 3.1 months in July 2020.

“We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” NAR Chief Economist Lawrence Yun said.

“Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available,” Yun said.

The median existing-home price for all housing types in July was $359,900, up 17.8% from July 2020 with gains in every region.

“Although we shouldn’t expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve,” Yun said.

Long, of NAFCU, said the slowing of price increases has worried some homeowners on the sidelines that they might miss out on the current record prices, “generating more listings from sellers who want to take advantage of the market while it remains favorable.”

On the construction side, Long said housing starts fell 7% this month while permits rose 2.6%.

“Homebuilders have also sold more houses than they can build and have had to pause sales to catch up,” he said. “Interest rates are expected to stay very low into the medium-term, increasing demand.”

NAR found homes typically remained on the market for 17 days in July, unchanged from June and down from 22 days in July 2020.

First-time buyers accounted for 30% of sales in July, down from 31% in June and down from 34% in July 2020.

Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in July, up from 14% in June but even with 15% from July 2020. All-cash sales accounted for 23% of transactions in July, even with June and up from 16% in July 2020.

Callahan & Associates, the Washington, D.C., credit union company, estimated Aug. 11 that credit unions originated $81 billion in first mortgages in the second quarter, up from $74 million in the first quarter and about the same as in 2020′s second quarter.

Among all lenders, second-quarter mortgage originations were $460 billion, up 44% from the first quarter and up 32% from a year earlier, according to the Mortgage Bankers Association.

The MBA’s Aug. 22 forecast showed purchase originations falling 9.3% from the second quarter to the third quarter, and rising 3.8% in the fourth quarter. For the year, the MBA forecast purchase originations will rise 14% to $1.63 trillion.

Visa Inks Partnership Agreements With 3 Crypto-Service Providers

SAN FRANCISCO—Visa has inked three partnership deals for crypto service providers Tala, FTX, and CoinZoom to offer its cards.




The deals would also address the complicated regulatory policies brought by the accompanying costs of fiat to crypto conversions, and the limited acceptance of cryptos that prevent it from going mainstream, EconoTimes noted

Visa's deal with Tala was for establishing cryptocurrency solutions for the global unbanked.

Meanwhile, the partnership with CoinZoom was for introducing five different options of CoinZoom Visa Cards for its US customers to enjoy unique benefits, like discounts, cashback, and rewards.

These Visa cards are connected to CoinZoom wallet, enabling users to pay cryptocurrency for goods and services at more than 53 million merchant stores and VISA Partner outlets worldwide, EconoTimes said.

Addresses ‘Growing Problems’

“Cryptocurrencies can address the growing problems of remittance solutions, including too many intermediaries, excessive transaction charges, and delays in transfers. A crypto-based remittance solution enables users to seamlessly send and receive fiat and cryptocurrencies without any fees or geographical restrictions,” EconoTimes said.

Visa now has more than 50 crypto wallets and platforms, up from 35 in the first quarter. The crypto wallets drove over $1 billion in payments volume, representing a significant engine of growth for Visa, the company said.

Minutes Show Fed Seeking to Strike a Middle Ground

WASHINGTON–Minutes released from the Federal Open Markets Committee’s most recent meeting show the central bank is seeking to find a middle ground between tapering bond purchases while providing assistance to an economy still seeking to recover from the coronavirus lockdowns.

“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” the minutes state.

The Fed has been buying approximately $120 billion in asset purchases per month. It left rates unchanged when it adjourned the meeting.

Some Disagreement

Not all of the FOMC members were in complete agreement, the minutes indicate.

“Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year,” the Federal Reserve said.

Those FOMC members indicated that while employment has improved and inflation remains high, the labor market needs more help, and therefore more bond purchases, to fully recover.

The economy continues to dictate the pace at which such tapering will occur. In July, the country’s employers added almost 950,000 workers, helping to drive the unemployment rate down to 5.4%.

The Inflation Challenge

Meanwhile, inflation remains a challenge, with the country reporting a 5.4% year-over-year gain. Core inflation, however, was more muted.

The minutes also indicate some of the FOMC members highlighted “the risks that rising Covid-19 cases associated with the spread of the Delta variant could cause delays in returning to work and school and so damp (sic) the economic recovery.”

Michael Moebs (speaker at this years conference in Fort Worth) says "Operating Efficiency Will Be Key"

LAKE FOREST, Ill.—Not since Congress passed the Truth-In-Savings Act in the early 1990s has there been so much change in the overdraft market as what has taken place this year, says one economist, who adds credit unions need to respond with big cuts to their own overdraft pricing and by making large improvements to operating efficiency—or watch Walmart walk away with members.



Michael Moebs, economist and CEO at Moebs Services and who has spent considerable time analyzing overdraft practices, noted that not only is the overdraft market seeing a potentially significant shift but Washington has its eyes https://www.cutoday.info/Fresh-Today/Contentious-Moments-as-Senator-Grills-Bank-CEOs-Over-Overdraft-Fees on overdrafts, as well.

The Stop the Overdraft Profiteering Act was also recently introduced in the Senate.

“From Congress to consumers swiping debit cards across America, overdrafts are hot,” said Moebs. “PNC Bank led the way in April by introducing https://www.cutoday.info/Fresh-Today/PNC-Bank-Intro-s-Low-Cash-Mode-Says-It-Could-Save-Customers-Up-to-150M-in-Overdraft-Fees-Annually Low Cash Mode, an innovative payment feature allowing the consumer to choose which transactions to approve for overdrafts. And then, in early June, Ally Bank reduced their overdraft fee to zero.”

Two More Follow Suit Moebs pointed out Walmart soon followed in late June by rebranding its re-loadable MoneyCard as a new checking account ---Read Complete Story HERE

Letter to Credit Unions Says NCUA Exam Modernization Now Underway

ALEXANDRIA, Va.—NCUA has sent a Letter to Credit Unions (21-CU-08) detailing the agency's transition to modernized systems. The agency said it will begin this transition in August.

NCUA’s efforts will include the implementation of emerging and secure technology that supports the NCUA’s examination, data collection, field of membership, and reporting efforts.

“These new applications will streamline processes and procedures and provide significant benefits to credit union users,” NCUA said.

Key areas affected:

• NCUA Connect
• Admin Portal
• Consumer Access Process and Reporting Information System (CAPRIS)1
• Modern Examination & Risk Identification Tool (MERIT)
• Data Exchange Application (DEXA)

Training Available

To prepare credit unions for the transition to these new systems, NCUA said it will provide credit union user training through various avenues, including:

• A self-paced training curriculum covering MERIT functionality available through the NCUA’s Learning Management Service
• An instructional guide describing the Admin Portal functionality to manage users for your credit union and explaining how to access NCUA Connect
• User guides, FAQs, and support materials for MERIT and DEXA can be found at: Enterprise Solution Modernization (ESM) Program | National Credit Union Administration (ncua.gov)
• A CAPRIS Federal Credit Union Users Guide with detailed steps to access and use the system will be posted on the NCUA’s website. (The guide will also be available in the Help section of the CAPRIS application)
• Live webinars with question and answer sessions, available by registration. More details about training sessions for MERIT and CAPRIS and how to view them will be announced as soon as they are available, NCUA said

Carvana Banned From Doing Business for 6 Months in 1 Market

RALEIGH, N.C.–North Carolina has suspended online used-car retailer Carvana Co. from selling cars in the Raleigh market until January of 2022 after a state investigation determined the company failed to deliver titles to the motor vehicle department and sold cars without state inspections.

A number of credit unions nationally have created relationships with Carvana to expand their auto lending.

According to the North Carolina Attorney General’s office, the state’s motor vehicles department, it has revoked Carvana’s dealer license for its Wake County, N.C. location until Jan. 29, 2022.

Tempe, Ariz.-based Carvana also has agreed to pay a civil penalty of $500 and an administrative hearing fee of $200, according to court documents.

The penalty was part of an agreement Carvana reached earlier this month with state officials, following a probe by the North Carolina’s Division of Motor Vehicles, the Wall Street Journal reported.

“We’re pleased that we were able to reach a solution with the North Carolina DMV,” Carvana spokesperson Amy O’Hara said in a statement. “We’re proud of the tens of thousands of North Carolina residents we’ve served since 2014 and are excited to continue delivering exceptional customer experiences there for many years to come.”

Carvana sells cars exclusively online and has a market valuation of $64 billion, higher than that of Ford Motor Co., the Journal said.

Consumer Complaints

State officials in North Carolina said the motor vehicles department brought the enforcement action after receiving a consumer complaint and conducting an investigation.

The state said in court filings that Carvana violated dealer licensing laws by not delivering the vehicle title to the DMV in a timely manner and failing to perform a state-required inspection before the vehicle was sold in North Carolina, according to the Journal.

The Journal further reported state officials also said the company issued out-of-state plates and tags to a vehicle sold to a North Carolina resident, also a violation of dealer licensing laws.

North Carolina said the action is limited to the specific Raleigh-area location, not the three other sites that the company has in the state.

Virtual FinCEN Exchange Focuses on How to Respond to Ransomware

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) convened a virtual FinCEN Exchange with representatives from financial institutions, technology firms, third-party service providers, and federal government agencies to discuss ongoing concerns regarding ransomware, as well as efforts by the public and private sectors.

Topics discussed include cybercrime, trends and typologies, detection and reporting, and the recovery of funds after ransomware attacks. The FinCEN Exchange builds upon FinCEN’s November 2020 event on ransomware, the organization said.

FinCEN noted ransomware attacks have targeted not only government agencies and corporate entities, but also ordinary citizens, who are often forced to choose between paying exorbitant ransoms and sacrificing personal information, mementos of great sentimental value, and other important data.

‘Growing Concern’

“Ransomware attacks are a growing concern for the financial sector, given that financial institutions can be targeted by ransomware attacks as well as face reputational and financial integrity concerns about the role financial institutions might play in the processing of ransom payments,” FinCEN said.

In October 2020, FinCEN noted it issued an advisory to alert financial institutions to predominant trends, typologies, and potential indicators of ransomware and associated money laundering activities. In addition, in June 2021, FinCEN highlighted ransomware as a particularly acute cybercrime concern in its issuance of the first government-wide priorities for anti-money laundering and countering the financing of terrorism policy.

Workshop to be Held

Following the event, FinCEN said it will host a ransomware technical workshop to discuss ways to establish an enhanced and more effective way to communicate, monitor, and receive information related to the use of cryptocurrency connected to a ransomware incident.

Used Car Prices Head Downhill

LAWRENCEVILLE, Ga.–Could used car prices finally be headed downhill?

After a steady run of rising used car prices due to a limited supply of used and new vehicles, Black Book reports used values moved steadily down in July.

Black Book’s Used Vehicle Retention Index for July dropped to 161.8 points, a 4.2 point (or 2.6%) decrease from June (166.0). The Index currently stands 28.4% above where it was the same time last year, during the recovery of the used market, after COVID-19 related closures in the Spring of 2020.

“Wholesale prices peaked in June and declined every week in July, with accelerating decline in the second half of the month,” said Alex Yurchenko, chief data science officer at Black Book. “Inventory of new vehicles continued to drop almost daily as the chip shortage continues to cause decreases in production levels. Available used inventory stabilized in July as demand leveled off with record high used retail prices. We expect wholesale and retail prices for used vehicles to decline in August as COVID cases continue to increase and consumer confidence takes a temporary dip, due to worries about the pandemic”

How Values are Calculated The Black Book Used Vehicle Retention Index is calculated using Black Book’s published Wholesale Average value on two- to six-year-old used vehicles, as percent of original typically equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition.
For info on the Black Book Wholesale Value Index, click here. 

 

“The July jobs report was almost uniformly positive with strong job gains resulting in a large drop in the unemployment rate,” said NAFCU Chief Economist and Vice President of Research Curt Long.

WASHINGTON–The U.S. economy roared into midsummer with strong gains in hiring, according to the latest jobs report, even as questions remain over the ability to maintain the momentum as the Delta variant of the coronavirus continues to spread.

According to numbers released last week by the Labor Department, employers added 943,000 jobs in July. But the number comes with a caveat in that the data was collected in the first half of the month, before variant-related cases exploded in many parts of the United States.

“The July jobs report was almost uniformly positive with strong job gains resulting in a large drop in the unemployment rate,” said NAFCU Chief Economist and Vice President of Research Curt Long. “The retail sector did not enjoy a share in the gains, losing over 5,000 jobs during the month, but otherwise gains were broad. This report will add to mounting pressure on the Fed to taper asset purchases.”

The numbers marked the best monthly performance since August 2020, and underscored how far the recovery has come, at least until the Delta variant appeared on the scene, noted the New York Times.

Unemployment Rate Falls

The unemployment rate fell to 5.4%, compared with 5.9% in June. Before the report, the consensus of economists polled by Bloomberg forecast a gain of 858,000 jobs, with the unemployment rate dipping to 5.7%.

“This is a great report, very solid in terms of job growth, wage growth and the decline in the unemployment rate,” Gus Faucher, chief economist at PNC Financial Services in Pittsburgh, told the Times. “I don’t see the Delta variant derailing the recovery.”

The Times noted the education arena, often a laggard in July as schools close and teachers go off the payroll, was a leader last month. Instead of letting teachers go as they have in the past, schools kept more workers on the payroll, creating a larger seasonal adjustment upward in the number of teaching jobs, the report noted.

Strong Hiring by Government

Local government added 221,000 education jobs, after a jump in June, and 40,000 jobs were added in private education. Leisure and hospitality businesses, which were hit hard by lockdowns last year, recovered further, adding 380,000 jobs. That included 253,000 in food and drinking establishments, along with hiring gains in lodging and in arts, entertainment and recreation, according to the Labor Department.

The data show manufacturing and construction showed more modest increases, hampered by higher goods prices and a shortage of components like semiconductors. Employment in professional and business services jumped by 60,000, a sign that the white-collar sector is on the upswing.

Capitalization of Unpaid Interest - Letter to Credit Unions (21-CU-07)

Letter to Credit Unions (21-CU-07)
Capitalization of Unpaid Interest

Dear Boards of Directors and Chief Executive Officers:

On June 24, 2021, the NCUA Board unanimously voted to lift the prohibition of capitalization of interest in connection with loan workouts and modifications from part 741, Appendix B. The rule became effective July 30, 2021, and applies to loan workouts and modifications on or after this date. The rule establishes documentation requirements to help ensure that the addition of unpaid interest to the principal balance of a loan does not hinder the borrower’s ability to repay the loan.

For borrowers experiencing financial hardship, a prudently underwritten and appropriately managed loan modification, consistent with safe and sound lending practices, is generally in the long-term best interest of both the borrower and the credit union. Modification options include lowering of loan payments or the interest rate, extending the maturity date, partial principal or interest forgiveness, and capitalization of interest. Such modifications may allow a borrower to repay the loan, which helps the borrower and the credit union avoid the costs of default and foreclosure. Read the Letter to Credit Unions