ALEXANDRIA, Va. (6/23/14)--The National Credit Union Administration on Friday produced a new web page with information about interest rate risks.
The website includes videos, visual information about trends that impact interest rate risk, and links to NCUA rules, guidances, sample letters to credit unions and recommended best practices.
The interest rate risk video that was most recently produced by the NCUA is also available on the regulators' YouTube channel.
NCUA Chair Debbie Matz said in a press release that credit unions are "faced with extraordinary interest rate risk challenges" due to shifts in the make-up of portfolios. She encouraged them to utilize the new resources.
"In the event of a rapid change in interest rates, the result at some credit unions would be stressed earnings and the possibility of large declines in economic value," she added. "While we are aware that many credit unions are well positioned to manage this risk, there are others that have potentially excessive exposure to interest rate risk that could result in losses to the entire system."
NCUA Chief Economist John Worth described the way credit unions are using investments as a "critical emerging risk."
"Over the past five years, credit union's long-term investments jumped as a share of assets," he said. "In a rising rate environment, long-term investments have the potential combined with other fixed-rate assets to anchor interest income at low levels even as interest costs move higher."