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Asset Securitization Rule Too Limiting: Comment Letters

Critics say the NCUA's proposal to allow credit unions to bundle and sell their loans reveals a lack of secondary market expertise.

By Michael Muckian | Updated on September 25, 2014

The NCUA’s recent asset securitization proposal, which would allow credit unions to bundle the loans they originated and sell them as securities on the secondary market, is tangled in so many tripwires that it severely limits the number of credit unions that can participate. So says many of the credit union executives and industry experts who submitted letters to the NCUA during the comment period that closed Aug. 25.

Moreover, the NCUA’s lack of experience and oversight in the secondary market further hamstrings credit unions trying to attract investors without violating what some experts believe are crippling restrictions. If the proposal is adopted as presented, credit unions may wind up playing a zero sum game, according to Chris Howard, vice president of research for the Washington-based Callahan & Associates.

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