Debt ceiling deal has credit union implications

Congress is expected to vote this week on the debt ceiling deal reached over the weekend that would suspend the debt ceiling until Jan. 1, 2025.

The House is expected to vote mid-week, followed by the Senate, allowing for final passage before Treasury Secretary Janet Yellen’s estimated June 5 deadline.

The legislation contains several implications for credit unions, including rescinding unspent funds from the Treasury’s Emergency Capital Investment Program (ECIP).

Additional appropriations effects are likely going forward, including on Treasury’s Community Development Financial Institutions Fund, NCUA’s Community Development Revolving Loan Fund, and the U.S. Agency for International Development’s Cooperative Development Program.

While these changes would have credit union impact, CUNA’s analysis shows the legislation is far preferable to a default, which would likely result in the U.S. entering a recession, and affect all consumers by:

• Seriously disrupting financial markets, including a stock market decline.
• Leading to a dramatic fall in consumer investor, and business confidence
• Ballooning job losses and pushing the unemployment rate up rapidly.
• Leading to substantially higher borrowing costs.