Let me give you an illustration. The article said it would take 62 car loans making 62 monthly payments to compare and there are the associated costs to maintain 62 loan files and to process and review the 62 loan applications. While CMO investments can be insured by the federal government, no credit union member has a AAA credit rating no matter how creditworthy. The article was written by a professional doing his job selling CMOs. These statements are not only inconsistent with credit union philosophy, they are also wrong.
Evidence abounds that a loan to a member is the best investment.
Bill Rissel, president of Fort Knox FCU, made a concerted effort to make member loans from May 1993 to January 1995. He produced more than double the income of an average investment portfolio. Capital and return on assets improved. We at NCUA do not want to over regulate you. The opposite is true.