SAN DIEGO -- Because it purchased so many "front loaded" investments, Western Corporate Federal Credit Union is expected to report significant permanent impairments in the near future.
Scott Hunt, Director of the NCUA's Office of Corporate Credit Unions, told Town Hall attendees this morning that while U.S. Central Federal Credit Union's investments vary in weighted average life, WesCorp's securities will mature sooner, which gives the market less opportunity to recover.
Hunt was even less optimistic when answering a question from the audience regarding the potential for WesCorp investments to recover losses. He said based on NCUA and third party expertise, WesCorp investments are highly unlikely to perform better than estimated.
The seized WesCorp purchased securities backed by mortgages concentrated in the nation's hardest hit real estate markets, including Los Angeles, Phoenix and Miami, Hunt said. Home values are still sinking in those areas, and lenders have so many foreclosures in the pipeline, they can't even process them all.
Additionally, Hunt said the NCUA currently has no plan to transition either WesCorp or U.S. Central's board back to members. However, NCUA General Counsel Bob Fenner said any member who has a concern about the NCUA's handling of the institution can query Hunt's office, and will receive a response.
