What happens if no one CARES?

With Congress and the President increasingly unlikely to reach agreement on further supporting the economy with an additional infusion of cash, credit unions are entering what will be the most dangerous part of the pandemic for both them and their members.

Regardless of what side of the political spectrum you are on, the fairest assessment of the CARES Act is that it did shield the American economy from the worst effects of the self-induced coma triggered by the COVID lock-downs.  As researchers for the New York Fed recently concluded in the Liberty Street blog

Recent data suggest that the CARES Act and other public and private interventions have been largely successful so far in preventing a wholesale surge in household loan delinquencies. This outcome has been achieved in large part by providing income support, and by allowing borrowers to defer payments through mortgage and student loan forbearance programs and through additional temporary relief provided by auto loan lenders and credit card servicers.

In fact, this is the only way to make any sense of some of the recent economic data we have seen.  On the one hand, historically low interest rates have kept mortgage demand and house values surprisingly high in many parts of the country.  At the same time the recent IPO for the parent company of Rocket Mortgage was met with a lukewarm response.


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