NEW YORK - August 11, 2008 - Five of North America's largest credit unions are reporting big paper losses on mortgage-related securities, a sign that housing-market distress is spreading even to the most risk-averse financial sectors, the Wall Street Journal (WSJ) said on Monday.
According to federal regulatory filings, the five corporates showing big mortgage-related losses are U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union, and Constitution Corporate Federal Credit Union, the Journal said.
The filings indicate that the credit unions - cooperative financial institutions - have together reported about $5.7 billion in "unrealized" losses as of the end of May, the paper said.
The Journal quoted the National Credit Union Administration, the federal regulator overseeing credit unions, as saying that the losses were likely to be reversed when mortgage markets stabilize, and that the institutions were sound and adequately capitalized.
However, some outside observers are concerned that the credit unions were underestimating the depth of their mortgage-market problems, the WSJ said.