In its attempt to limit investment risk, the NCUA's proposed Part 704 regulations may actually increase risk, according to some corporates.
Iowa Corporate Credit Union President/CEO Sara Flynn voiced her objection to the recommended two-year weighted average life limit on securities, saying several appropriate investment products exceed that duration.
"If corporates are unable to extend assets they will be forced to take on more credit risk to achieve the return necessary to build the required capital," Flynn said. As written, the proposed regs increase both credit and liquidity risk, she said.
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