In many cases the yield gain is only a few basis points. Strategies should include the impact of new products, or new assets, on the credit union s risk profile. When dealing with CD brokers, CUs should compare the rates available for Treasury securities and those available from their corporate credit unions. They should also be sure that their safekeeping arrangements comply with the regulatory requirements of 703.60. CUs should also ask brokers for the bond equivalent yield on the CD, not just the simple interest rate of return, and should be cautious about coupon bearing and discounted zero coupon CDs that are sold at a large discount.
Brokers often provide their own shock test results.
A number of vendors also provide a similar service. A loan fully guaranteed for both interest and principal by SBA is a permissible investment. However, it is very difficult to evaluate the risk since the timing of cash flows is not known. June 2 - CUs continue to have problems with brokered CDs. While legal, often there are few loans backing these securities.