ALEXANDRIA, Va. — NCUA Director of Capital Markets & Planning Owen Cole told credit unions during NCUA's Risk Mitigation Summit Jan. 11 that better risk management will help credit unions use their capital more wisely to serve members of modest means.
|A lot of regulators' focus right now is on interest rate risk given the current declining housing market that has boomed for several years and built up in some credit union portfolios. However, Cole said, "A number of credit unions have effective risk management programs in place." A good plan will allow credit unions to determine what is worth the risk in order to exploit opportunities.
|"Having a better handle of your risk permits you to better utilize your capital," he stated. "I expect credit unions to employ certain risk management control…in a sufficiently sophisticated manner." Cole noted that by securitizing and selling conforming mortgages on the secondary market credit unions can shed risk and free up capital, capital that can be used for things like service to those of modest means.
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