S&P: NCUA Corporate CU Efforts Preserve Liquidity, More Capital Will Be Needed

Standard & Poor’s on October 9th wrote that NCUA’s actions have preserved confidence in the credit union system by stemming the liquidity crunch within the corporate credit union system; but have not “addressed some of the structural aspects of the system that are likely to evolve, and that could significantly alter the current framework.”

Standard & Poor’s believes that the

“[e]vents of the past 18 months may shake members' faith in the cooperative nature of the system, which had been a major factor supporting the corporates' creditworthiness. Specifically, the burden of premium assessments on the members may appear too great when compared to the benefits of membership. Ultimately, we believe that the system will need capital to offset the increasingly likely losses stemming from mortgage-related structured securities.”