Credit Union Times - April 5, 2017

Trusted News for Credit Union Leaders

Credit Union Times

APRIL 5, 2017 | VOL. 28 | NO. 11 | CUTIMES.COM

Y16

A DISRUPTION

Rule Breakers Set the Rules

JIM DUPLESSIS

jduplessis@cutimes.com

ome people seem to love shopping for cars, but for most, the process is more like a root canal without the painkiller.

Selling cars has been confined to businesses that own a lot and hire sales personnel, usually on commission.

That model is being disrupt-
ed by companies without a sales
force and with few, if any, physical
locations.

In the case of Uber, a company that exists almost entirely online has been able to make real money by connecting people who want to generate cash from the cars they drive with people who want to arrange their own rides.

Credit unions don’t have to
care about how people buy cars
or meet friends on the week-
ends. Narrowly, they should only
care about loaning money to car
buyers.

And companies like Uber, Carvana and Lending Tree don’t have to make loans to utterly disrupt the lending business.

Michael Cochrum believes it behooves credit unions to understand why.

“The people who are disrupting their market segment are typically tech companies that have figured out a way to ease the customer’s pain point,” said Cochrum, vice president of analytics and

PETER STROZNIAK

pstrozniak@cutimes.com

he additional Fed rate increases expected this year hearkens a CEO back to December

1996. Then former Federal Reserve Chair Alan Greenspan uttered the unforgettable words, “ irrational exuberance,” over the dot. com expanding bubble. In 2000, he raised interest rates several times and many believe it led to the dot.com bubble to burst over a two-year $5 trillion stock market crash.

Todd Harris, president/CEO of the $2.1 billion Tech Credit Union in San Jose, Calif., worries that history is repeating itself with irrational exuberance part 2 over Trump’s promises of expansive economic growth coupled with more Fed rate hikes that could lower loan demand over the long run and stall the industry’s growth.

But other credit union executives argue the rate hikes in December and March, and the ones expected to follow, signal the Fed’s confidence of self-sustaining economic expansion, which will boost consumer confidence and more people will take out loans, at least through 2017.

Nonetheless, both sides agree that if the economy continues to grow and higher interest Y18

‘Irrational
Exuberance’
Take 2

RATESFOCUS

MOBILE BANKING & PAYMENTS

Mobile and payments: Together, they’re the digital banking power couple. To keep their relationship strong, credit unions must provide members with a harmonious, integrated experience while staying on top of trends. Learn more in this Focus Report. Y6

HEALTH CARE

What’s Next?

House Speaker Paul Ryan and his allies had what looked like the big gorilla of efforts to change the Affordable Care Act.

Now that the American Health Care Act bill appears to be dead, or, at least is doing a convincing job of playing dead, other ACA-change proposals are getting more attention.

Any would-be ACA changers who want to make some kind of health coverage available to consumers in the individual market in 2018 need to act quickly, because health insurers are supposed to be developing filings for 2018 products now.

Even carriers willing to overlook the reality that making a profit in the individual market has been difficult since January 2014 are having a hard time knowing how they can sell sustainable coverage in 2018 without knowing what the support programs, or basic market rules, might look like.

Here’s a look at four possible solutions that are now getting more attention.

1. Ask Seema Verma

Tom Bulleit, a Washington-based partner at Ropes & Gray LLP, said in a written commentary about the cancellation of the AHCA bill vote that one obvious outcome could big a bigger role for the U.S. Department of Health and Human Services, and the new HHS secretary, Tom Price.