This Opinion piece warns to get ready to avoid the damage many credit unions would sustain should bond values swoon.
The bond price bubble will eventually pop as rates rise, creating potential for the next crisis: a one-two punch of deposit withdrawals and negative spreads as hundreds of credit unions fall short of the earnings needed to compete on deposit rates.
A new analysis by Sandler O’Neill underscores how critical the sheer size of financial institutions has become to their surviving and thriving. Yet top performing credit unions are being held back by a systemic lack of accountability.
As credit union management and boards learn more about the amount of toxic assets in corporate and natural person credit unions, their conclusion about assessments changes from "something we have to live with" to "we can't live with that."