BALTIMORE — Credit unions taking a wait and see approach to the financial markets bailout signed into law by President Bush on Oct. 3 declined to comment on its effect. But one attorney suggested that CUs look for new sources of liquidity and to Europe for new loan products.
Paul Schieber, a credit union attorney with Blank Rome, said the financial rescue law will make it easier for credit unions to sell their loans on the secondary market. But, he said, no one knows what the secondary market is going to look like in a couple of months. Schieber suggested that smart credit unions start looking for new sources of market funding such as the Federal Home Loan Banks.
"There are going to be new sources of money in the market; if not this week, then in the next couple of years. Credit unions should be looking for new sources of funding," he said.
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Schieber is optimistic about the future of the secondary market. "I think the market is going to be stronger. The market is going to be fascinating in a year or two. There will be pent up demand, new players and new sources of capital. People who are going to be buying the stuff the federal government is now buying under the plan will be able to refinance some of that paper," he said.
Schieber suggested that credit unions look at European loan products for ideas. For example, he said, in Australia it is common to tie an insurance policy to a mortgage.
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