FORT LAUDERDALE, Fla.-CFOs are being cautioned that their risk models may be underestimating a pending threat.
Nader Moghaddam, president/CEO of Financial Partners Credit Union in Downey, Calif., believes that while CUs factor rising interest rates into their ALM models, they may be miscalculating how quickly rates could rise. "It's not rising rates, it's the speed with which they rise," said Moghaddam, who believes a quick increase in rates may occur in the next year or two. "I don't think our balance sheets are structured in a way to deal with the speed of this change."
Moghaddam told the CUNA CFO Council annual meeting last week that his own CU's planning for worst-case scenario for declining real estate values in Southern California was a 25% drop. Instead, the market saw 50% decreases. "I would be very cautious. The problem is that after what we've gone through the last few years we are very risk savvy," he said. "Hopefully, we don't cripple ourselves in our growth opportunities. But there is a new risk coming."
