ALEXANDRIA, Va. – NCUA announced yesterday it is extending the expiration date of its Temporary Corporate Share Guarantee Program, which is guaranteeing all deposits in corporate credit unions, for another three months, until Dec. 31, 2011.
The extension will cover new deposits in corporates with maturities of two years or less made before the end of this year, the agency said yesterday.
The share guarantee program is one of a number of emergency steps taken by NCUA to prevent a run on the corporates, many of which are suffering growing losses from their investments in mortgage-backed securities and in U.S. Central FCU. NCUA has also guaranteed short-term debt issued by the corporates and created a temporary Corporate CU Stabilization Fund to resolve the failures of U.S. Central, WesCorp FCU and any other corporates that may need assistance.
The share guarantee program covers all shares, excluding paid-in-capital, membership capital accounts, and other NCUA liquidity programs, in corporates that are participating on a voluntary basis.
NCUA also said it is reviewing the growing losses at U.S. Central and WesCorp, which have been segregated into the new corporate stabilization fund and, like the rest of the credit union world, is awaiting U.S. Central’s audited financials for 2008 to determine the extent of the problem. NCUA, which is running U.S. Central under conservatorship, said Deloite & Touche, U.S. Central’s auditor, and PIMCO have reached agreement on sharing PIMCO’s estimates of losses on the bond portfolio.
Two weeks ago WesCorp reported a $541.1 million loss for the second quarter on its investments, and U.S. Central reported a $537 million loss. Those losses have further depleted U.S. Central’s capital by about $500 million, which is being passed down to the other corporates, and in some cases, to natural person credit unions.
The two corporates have reported more than $10 billion of losses over the last 18 months, with more losses expected in the coming weeks and months.
