Word: riskier
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...retail credit unions couldn't get elsewhere. As the era of deregulation descended on the financial-services industry, though, retail credit unions were increasingly able to fund themselves directly in the capital markets. To stay competitive, corporate credit unions knew they had to pay higher yields - and that meant riskier investments. "Over time they morphed into something more like investment banks," says Charles Felker, a managing director for the fixed-income brokerage First Empire Securities and former senior investment officer at NCUA...
...could someone else offer a higher rate? Chances are, the bidder wasn't looking to make a profit - just trying to inject liquidity into the institution's balance sheet - or was pursuing riskier investments in order to make the transaction make sense. "When a bank chases yield, they then start making riskier investments or riskier loans," says Fine of the Independent Community Bankers of America. That's not something we particularly need more of right...
...data shows that people have still have more access to credit than ever before," says Andrew Davidson, a VP at Synovate. "Some companies are pulling back credit to riskier borrowers, but for the industry as a whole, access and usage of credit cards is at record levels...
...some economists wonder why buying up credit card and auto loan debt is any better or easier to do than buying up mortgage bonds. In fact, when it comes to credit card debt it could be riskier way to use taxpayer money. That's because credit card debt unlike mortgages is unsecured. If a borrower defaults, there is no house to repossess. What's more, credit card debt, unlike a mortgage, can be wiped away in bankruptcy. (Read "Four Steps to Ending the Foreclosure Crisis...
...This is riskier for taxpayers," says Andrew Jakabovics, an associate director at the Center for American Progress. Worse, it's not clear the program would do anything to boost the economy. Yes, consumer spending is dropping, but some economists think that is a function of confidence, not credit. "Paulson seems to be working under the impression that when it comes to consumer spending liquidity is the issue," says Dean Baker, who co-founded the Center for Economic Policy Research. "People aren't buying because they just lost a lot of money and might be about to lose their job." Lastly...