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.

"What's right with the proposal are the objectives that we can all agree on," Howard said. "What's wrong with the proposal is that it's about credit unions interacting with other parts of the economy. You can't bring two economic sectors together effectively when you focus on just one of them."