As interest rates rise, credit unions must look for strategies to protect margins and valuations on their loans and investments. A new update to Financial Accounting Standards Board accounting rules may provide options to use hedge accounting.
In this episode of the CUNA News Podcast, sponsored by Moody’s Analytics, Scott Dietz, industry practice lead in Moody’s risk solutions practice, will break down how new accounting rules provide opportunities for a multilayered approach to hedging interest rate risk.
Investing in derivatives for hedge accounting purposes has often been considered too complex or risky for many credit unions and regulators. But Dietz says this focused, multilayered approach does not require complex or new derivative types, making the strategy worth serious consideration.
What’s more, the current expected credit loss processes credit unions have incorporated into their accounting practices over the past few years can work to their benefit as they consider using this strategy.
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
