Credit unions in search of higher returns are loosening lending standards and piling into longer-term assets, exposing the firms to potentially significant losses if interest rates rise and worrying regulators in the process.
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Cus have 10% tier-1 capital, no stockholders, pay no income taxes, have little to no business lending. They have the financial capacity and simple stability to carry almost all of this risk.
ReplyDeleteUnless. You are a regulator bent on consolidation though stagnation to the benefit of you and your larger credit unions.
None of that has anything to do with the IRR in the system.
ReplyDeleteAnd the 10% isn't enough for some.