Twelfth District CDIAC Meets to Discuss Regional Economy, Strategy
October 31, 2011
November 1, 201
The 11 members of the 12th District Community Depository Institutions Advisory Council (CDIAC) met on Wednesday, Oct. 26, in San Francisco to discuss the state of the regional economy and the issues facing the district. The 12th District is the largest of the 12 created by the Federal Reserve act of 1918, and the districts’ various committees are together responsible for planning and shaping the Federal Open Market Committee’s (FOMC) monetary policy.
Ron Barrick, President/CEO of Advantis Credit Union and the vice chairman of the council, explained that the CDIAC is “a mechanism for officials to monitor economic conditions on the ground throughout the region and to gather input on the effect that Federal Reserve policies are having on consumers and small businesses—and the financial institutions that serve them.”
The 12th District is headquartered in San Francisco and includes the nine western states—Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington—as well as American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The council noted that, like most of the United States, the region remains severely affected by the recession, and the return to economic stability remains a long, slow climb.
“With exception of a very few areas that are showing some modest signs of recovery, economic conditions in most parts of the district remain weak and unsettled,” Barrick said.
As a result, most financial institutions throughout the district have plenty of money to lend, but because of negative equity and credit challenges—often employment related—are lacking enough qualified borrowers to lend to.
“Clearly, there’s brisk competition for credit-worthy borrowers right now, which, along with current monetary policy, is placing significant downward pressure on interest rates,” Barrick said. “While this is good for borrowers, it doesn’t look like there’s relief in sight for depositors or financial institutions anytime soon. It also seems clear that achieving stability in the housing market is going to be a critical component of a sustained economic recovery.”
Barrick made specific mention to Federal Reserve officials of the burden that ever-increasing regulations are having on financial institutions, and he touted raising the member business lending cap as a way to create jobs and free up money for local communities.
“The continuous stream of additional regulatory mandates are having a tangible negative impact on all financial institutions, particularly smaller ones,” Barrick said. “The fact is those ever-rising costs of compliance are ultimately going to be paid for by consumers and small businesses in the form of lower deposit rates, higher loan rates and more service fees. This is also a significant issue because it is evolving into a primary driver of consolidation throughout the financial services industry, which will result in less competition and consumer choice.”
“Of course, eliminating or at least lifting the credit union member business lending cap is a decisive, common sense action policy makers can take today, when it’s most needed, to create jobs and stimulate the economy,” he added.
The council’s next meeting is scheduled for Tuesday, March 20, 2012.
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