Losses at corporate credit unions continue to pile up at an accelerated pace, raising doubts about their ability to continue as "going concerns."
The problems also raise questions about whether the National Credit Union Administration will go back to Congress to seek additional assistance.
The widening losses at Members United Corporate Federal Credit Union have eliminated almost all of the credit union's capital and "raise substantial doubt" about its ability to "continue as a going concern," its auditors, McGladrey & Pullen LLP, said in the recently released audit for 2009.
Auditors have already raised "going concern" doubts about U.S. Central Federal Credit Union and WesCorp Federal Credit Union, which have been under conservatorship by the federal agency since March 2009.
Similar doubts were expressed recently by auditors for Constitution Corporate Federal Credit Union, Southwest Corporate Federal Credit Union and other corporate credit unions as losses continue to expand.
Auditors for First Carolina Corporate Credit Union, which has reported diminishing capital, said "there is uncertainty about whether the credit union will be able to restore capital to a level necessary to meet the requirements of the new regulation."
Observers said the audits signal more trouble ahead.
"These letters by the auditors are saying the situation is likely to get worse," said Charles Felker, vice president at the credit union bond house First Empire Securities and a former chief investments officer at NCUA.
Felker urged the agency to seek additional assistance from Congress.
"I'm wondering when NCUA will go to Congress and say: 'We need a bailout,' " he said.
The agency said last week that it is keeping Congress apprised of the losses.
"NCUA is in ongoing communication with Congress about the state of the corporate credit union system," said John McKechnie, chief spokesman for the agency.
