The bond price bubble will eventually pop as rates rise, creating potential for the next crisis: a one-two punch of deposit withdrawals and negative spreads as  hundreds of credit unions fall short of the earnings needed to compete on deposit rates. The cost of funding will overwhelm asset yields and punish even the strongest balance sheets due to the interconnectedness of credit unions that leads to a phenomenon we call the growth tax.

Although we believe it is premature to say the U.S. has recovered from the credit bubble, important financial trends indicate that credit unions should start planning for the inevitable end of Federal Reserve rate accommodation now, while there is still time.

For perspective, take a look at the nearby table.