Credit Union Journal Daily Briefing | Friday, February 5, 2010
ORLANDO, Fla. – Corporate credit unions continued to hold securities showing unrealized losses of $17 billion at year-end 2009, which is down from the more than $25 billion in unrealized losses corporates held at the beginning of the year, but NCUA cautioned against reading too much into those numbers because growing amounts of losses are being realized.
"You also have to look at the actual credit losses, which have increased with every quarter," Scott Hunt, director of NCUA’s Office of Corporate CUs, said during yesterday’s NCUA Town Hall meeting on the corporate regulatory proposal. The chief corporate examiner said NCUA is reluctant to sell the troubled bonds because it would require them to lock in losses. "We don’t want to liquidate bonds. That would make for multiples of the (special NCUSIF) assessments."
Hunt said professionals hired by NCUA to project credit losses continue to see conditions worsen even beyond conservative estimates. "Most people who enter (mortgage) delinquency enter foreclosure. We’re really only delaying the inevitable in many cases. When these homes hit the market it will put a dampening on the prices in the markets we’re most concerned about, the sand states, which will only exacerbate losses on those securities," he said.