NCUA Deputy Executive Director Larry Fazio said the regulatoralready has “solid estimates” on the size of corporate lossexposures and other corporate stabilization expenses and is ontarget to recommend an assessment figure this summer.

Fazio reported the progress to the NCUA Board May 20, one weekafter Chairman Debbie Matz told an audience in Wisconsin that theboard will consider separating corporate stabilization relatedassessments from those that replenish the share insurance fund.

Despite new OTTIs at corporates, the NCUA's original credit-lossestimates haven't changed much. That's because to date, only $600million in actual confirmed losses have hit corporates, far shy ofthe total $12 billion expected.

However, Fazio said that pace of actual loss return will soonchange. More than half-$7.6 billion-is expected to return tofront-loaded corporate investment portfolios as actual lossesduring 2010 and 2011. Fazio stressed that the $12 billion totalloss estimate includes corporate impairments covered bymember-contributed capital and is not the net loss amount to becovered by the corporate stabilization fund.

“Within the next two years, we will know if our loss projectionswere pessimistic or on target,” Fazio told Credit UnionTimes.

He added he fields two primary questions from credit unions: Howmuch will this year's assessment be, and how much will corporatestabilization cost in total? Determining a year's assessment is abalancing act between the impact of the cost on earnings andcapital, and the risk of back-end loading the assessments.

After real losses in 2010 and 2011 are matched to estimates andthe NCUA has a more precise total loss number, the regulator canmake adjustments, if needed, to the corporate stabilization fundfor the remainder of the repayment period.

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