December 10, 2008
Congress Returns for a Second Lame Duck Session
The U.S. Congress returned to Washington to begin a second lame duck session, with focus primarily on consideration of legislation to bailout automobile manufacturers. Credit Union National Association Vice President for Legislative Affairs Ryan Donovan said that the association will be monitoring the development of this legislation closely. "Everyone's expectation is that the bailout bill will be carefully negotiated between Congress and the Bush administration, and very limited in scope," Donovan said.
And in fact, The New York Times and other media outlets reported that an agreement between the White House and Congressional Democrats moved forward. The tentative plan would call for a taxpayer-financed rescue with an administration-appointed overseer with expertise in areas such as economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency, and environmental protection.
It is expected that when Congress adjourns--most likely with an automaker package hammered out--it will remain out of session until January 6 when congressmen and senators will be sworn into office for the 111th Congress.
The federal lawmakers may be quite busy even before the January 20 swearing in of Barack Obama as the 44th President. The House calendar currently features at least 10 days slated for votes. A January calendar has not yet been released by Senate leadership.
Employment Numbers Fall Dramatically
The payroll numbers "fell off a cliff in November," as job losses are rising at an increasing rate, according to a credit union industry economist. Firms are cost cutting in the face of falling revenues, while others are being proactive with job cuts before revenues fall, said Steve Rick, Credit Union National Association (CUNA) senior economist.
Employers slashed 533,000 jobs in November, the Labor Department reported. The drop was the largest since December 1974. The economy has lost 1.91 million jobs so far this year. The unemployment rate rose to 6.7% in November--from 6.5% the previous month and the highest level since October 1993. The data indicate a prolonged recession. At 12 months, the downturn already is the longest since the 16-month recession in 1981-82.
Since the beginning of the recession in December 2007, as announced by the National Bureau of Economic Research, the number of unemployed people has increased by 2.7 million. The unemployment rate has risen by 1.7 percentage points.
The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.2 million in November, but up by 822,000 over the past year.
Job losses in November were large and widespread across industries. Employment in manufacturing plunged by 85,000 and has fallen by 604,000 since December. Employment in construction dropped by 82,000 last month and is down 780,000 since peaking in September 2006.
Employment in retail trade fell by 91,000 during November. In one bright spot, health-care employment rose by 34,000 last month, and it has increased by 369,000 over the past 12 months.
"The economy is going through a self-reinforcing downward spiral the likes of which we haven't seen since 1982," Rick said. "This will require massive federal stimulus to reduce the depth, duration and dispersion of the recession. CUNA economists predict unemployment will rise to 9% by this time next year, up from 6.7% today. "The rise in unemployment will worsen credit conditions for the next two years," he added. "Credit union loan charge-offs as a percentage of total loans could rise to over 1% in 2009, up from the recent five-year average of 0.52%."
NCUA Continues Share Insurance Outreach
The National Credit Union Administration (NCUA) has continued its active promotion of the safety of federally insured credit union deposits through a nationwide advertising campaign.
“At times of economic difficulty and uncertainty surrounding the financial services system, it is more important than ever for the NCUA and other federal agencies to step forward and remind consumers of the strength and safety of federal deposit insurance. While the crisis that intensified during the summer has been unsettling, it has also served as an opportunity for NCUA to increase our educational efforts. I am gratified that, based on feedback from credit union members and leaders, the advertising campaign has succeeded in enhancing public awareness,” noted NCUA Chairman Michael E. Fryzel.
Throughout the past two months NCUA has remained steadfast in its efforts to furnish the public with the information they need regarding share insurance, the following list describes October, November, and December initiatives:
- NCUA provided nearly 9,000 radio stations across America with 90 second and 30 second public service announcement (PSA) regarding NCUSIF insurance.
- NCUA supplied each federally insured credit union with an “Uncle Sam” federal insurance poster. The poster, intended for display in credit union lobbies, informed members of the recent change in coverage to $250,000 and emphasized the safety of insured funds.
- A newspaper ad featuring the same “Uncle Sam” motif appeared in 23 major newspapers nationwide between October 1 and November 17.
- Ten second radio ads were aired in six major-market radio stations throughout the month of November and December, again describing the changes and share insurance coverage and the security of member funds in a federally insured credit union.
- NCUA continued to update its Share Insurance Toolkit. Several updates were made including but not limited to; Chairman Fryzel’s video message to credit unions, Board Member Hyland’s Share Insurance Webinar, brochures reflecting the new changes in insurance coverage, an updated share insurance estimator, an NCUA fact sheet, and most recently the easy to use share insurance power point, “Share Insurance and You.”
Board Member Gigi Hyland hosted “Share Insurance 101,” an interactive webinar describing share insurance and its changes.
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