Colorado banks and credit unions healthy as Myklebust ends watch
After nearly a dozen years regulating the state’s credit unions and over two years as the state banking commissioner, Chris Myklebust realizes any future downturn is already baked into the system.
People just can’t see it yet, and they won’t until everyone at the party starts heading for the front door.
“My experience has taught me when things are their best, that is when we should start taking steps for when they aren’t going to be the best,” he said.
On the whole, the state’s regulated financial institutions are in good financial shape, said Myklebust, who is retiring his dual roles at the end of the month.
Bauer Financial out of Florida describes no credit unions in Colorado as troubled or problematic and only 3.4 percent of banks fitting that description.
Although low oil and natural gas prices continue to weigh on the petroleum industry, the downturn hasn’t caused a wider credit crunch or triggered bank failures in the state.
One trend to watch is falling land prices in rural areas, which could compound the difficulties farmers, ranchers and others face due to low commodity prices.
Whenever the Federal Reserve lifts interest rates, as it is currently doing, that can tighten the availability of credit, Myklebust said. The next downturn, when it comes, won’t stress banks and credit unions as much as it will overextended consumers, especially those with heavy loads of student loans and auto debts, he predicts.
The Consumer Financial Protection Bureau issued a warning Wednesday about a sharp spike in borrowers using longer-term auto loans to acquire new vehicles. About 42 percent of auto loans made in the past year came with a payback of six years or longer, compared to only 26 percent in 2009.
Myklebust, who holds de-
grees in business administration as well as electronics engineering technology, was named the state’s commissioner of financial services back in 2006 and the state’s banking commissioner in July 2015.
At 48, Myklebust isn’t ready to leave the work world behind even as he leaves state employment. He said he will take some time to plan his next venture, which likely will focus on his interests in financial technology and natural resources and commodities.
“It will be brain storming season for me,” he said. Not on his agenda is a career in the cannabis industry, where he worked to find a model to allow legal marijuana businesses to participate in the banking system.
His regulatory work paved the way for the establishment of the cannabis-focused Fourth Corner Credit Union, which federal regulators blocked. But a lot has changed since 2014.
“The people who are holding themselves to the highest standards of compliance can get banked,” said Myklebust, who adds he will continue to advocate for federal acceptance of the legalized marijuana industry in the nation’s banking system.