Withdrawing from the Game

While the administration’s trade policy may have only an indirect impact on credit union fortunes, it is an example of how public policy can become sideways with America’s long term interests.  And our standing with the rest of the world.

What follows is a brief critique of the underlying assumptions about tariffs and how the rest of the world will react.  The analyst’s point is that poor policy assumptions lead to poor policy outcomes.

Policy is one aspect of the NCUA board’s role. The board no longer exists.  Future meetings have been cancelled and/or called tentative.

The board’s statutory role is to manage the agency.  That also is on hold.

The consequences of these absences of regulatory oversight will not be known for a while.  Meantime some credit unions will take the opportunity to push the envelope on corporate interests.

There will be fallout from this regulatory abdication on policy and agency leadership.  Like the trade example below, the market won’t wait to fill the current vacuum in supervision.

The Challenge of False Policy Assumptions

The following summary of US trade strategy is by William Reinsch at the Center for Strategic and International Studies *CSIS).

Even while uncertainty persists, not only about Trump’s intentions, but also about the half-life of his policies, his actions are being treated as the death knell for the global economy. Trump’s message to the world is that the United States is no longer a reliable partner. The obvious corollary is to find other partners, and that is just what others are doing—with the United States on the sidelines.   What is noteworthy is that it appears we are still making progress—in the same way and in the same direction as always. The difference is that the United States is not there; not under Biden and not under Trump. It is typical of Americans to think that we are leading —whatever we are doing is heading down the right path, with other countries running behind to catch up. In this case, however, it appears no one is following. The new negotiations tell me that the announcement of the old order’s death was greatly exaggerated, and that the case for trade liberalization remains a strong one. Since the current administration is not going to change its worldview, the challenge for U.S. companies is to find ways to stay in the game even as our government has withdrawn from it.