U.S. Central Reporting $2.3 Billion OTTI; Liquidity Squeezing Corporates

CU Times - 5/1/2009

U.S. Central FCU will report a $2.3 billion Other-Than-Temporary-Impairment charge when it releases its March 31 financials, the NCUA released today in its weekly corporate update. The OTTI will result in a total depletion of paid-in-capital, and a 63% hit on member capital accounts. The NCUA said it will release a letter to credit unions that provides accounting guidance.

The news follows today’s release of Western Corporate FCU’s financials, which revealed a $5.6 billion credit loss on its securities portfolio, and resulted in a total loss of PIC and MCA.

Also in the weekly report, the NCUA said seasonal liquidity challenges are taking their toll on stressed corporates. Chairman Michael Fryzel said the combination of normal seasonal outflow patterns and a broadly stressed market has prompted the board to consider providing longer term funding options and other enhancements to the Temporary Corporate Credit Union Liquidity Guarantee Program.