WARRENVILLE, Ill. – Several corporate credit unions are still counting the losses from investments with failed brokerage Lehman Brothers, with at least two, Members United Corporate FCU and Southwest Corporate FCU, tallying tens of millions of losses.
Members United's primary exposure to Lehman was in $45 million of corporate bond holdings. Those holdings were subject to Other Than Temporary Impairment and written down to just under 10 cents on the dollar in the second half of 2008, based on then-current market indications, according to Ronald Koza, chief investment officer for the $9 billion corporate. Members United liquidated $20 million of its holdings at prices between 14 cents and 21 cents on the dollar, according to Koza.
"Members United still expects to receive additional proceeds either through direct sale of remaining bonds into the marketplace or through settlement with the estate,” Koza told Credit Union Journal. "Because we don’t know what these resolutions will be yet the exact level of final recoveries is not currently determinable."
Southwest Corporate had written down the value of $49.5 million of senior debt issued by Lehman by 80%, or $39.6 million, as of last October, according to the $10 billion corporate’s financial reports to members. The corporate still held Lehman-backed bonds rated Triple B, according to its February financial report.
Officials with Southwest Corporate declined requests for comment.
Earlier, U.S. Central FCU, wrote off all of its $800,000 exposure to Lehman. And WesCorp FCU accrued a $3.9 million charge when it terminated an interest rate swap for which Lehman was the counter party.
Lehman filed for Chapter 11 bankruptcy in September of 2009 but creditors are wrangling over payments in the biggest bankruptcy in U.S. history and are expected to do so for years to come.
