SAN DIEGO — Credit unions must be ready for whatever thesetumultuous economic times throw at them, and part of that may meansecondary capital and retooling the business model.

Peter Duffy, associate partner at investment consulting firmSandler O'Neill & Partners, said he's currently working with 10large credit unions, restructuring their balance sheets to adapt toDuffy's “state of readiness” plan, which prepares credit unions forwhat he says are much tougher economic times ahead.

Duffy's state of readiness checklist divides institutions intofive categories, with group five the least ready and group one themost. The problem for credit unions is that levels two and one bothrequire access to alternative capital, and only corporates andcommunity development credit unions can access it.