ALEXANDRIA, Va. — There is a good chance that the reserves set aside for losses in the NCUSIF "won't be sufficient," to cover the losses at some of the large credit unions, NCUA Office of Examination and Insurance Director Melinda Love told the NCUA Board today.
And Deputy Executive Director Larry Fazio told the board that the assessments from the Temporary Corporate Credit Union Stabilization Fund will be affected by the timing and amount of bond defaults within corporate credit unions, with current estimates calling for $7.6 billion in defaults over the next two years. The stabilization fund has $6.4 billion set aside for current estimates of losses that would be incurred by the fund over the life of the securities, and must repay the Treasury Department $690 million in outstanding borrowings. Congress gave the NCUA a $6 billion line of credit last year but the agency has only used $1 billion to date.
Love said the financial reports of credit unions have shown "very mixed results." While the increase of CAMEL 3, 4 and 5 credit unions has slowed, some of the larger credit unions have continued to experience difficulty because of the economy's difficulties.
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