Supercalifragilisticexpialidocious is a word that we were introduced to in the 1964 Disney musical film "Mary Poppins". What does it mean? Who really knows, but it is a pleasant sounding word and has a good ring to it.
Recently, I was introduced to a financial concept that I call interestrateriskderivativeswapcap. The word may not flow as easily, but it does have an interesting sound to it and combines, for the most part, much of what needs to be looked at when proposed as a risk-management option for credit unions.
Financial regulators are consistently looking at additional, permissible ways for the institutions they regulate to invest their funds. In today's economy, having experienced losses as a result of a recession, an economy that cannot heal itself and a housing market that has more problems than a math book, financial institutions are trying to find ways to protect themselves from the interest rate risk that comes with the current environment while at the same time achieving acceptable returns.
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