ALEXANDRIA, Va. (4/20/09)--The National Credit Union Administration (NCUA) released a summary of the analysis of the Pacific Investment Management Company, LLC (PIMCO) on the residential mortgage-backed securities held by corporate credit unions Friday. The summary does not provide a detailed review of PIMCO's analyses or findings, but it provides information on the process for valuing the loans on which the mortgage-backed securities are based and information on PIMCO's views and conclusions. The summary states: “The results of cash flow projections (for the underlying loans) showed a wide range of possible value results due to the volatility of the items that impact cash flow projections. Market prices derived from third party vendors and PIMCO's internal analysis were significantly lower than the aggregate fair value of the same securities reported by the corporate credit unions (as of Jan. 31, 2009).” Earlier last week, it was expected that NCUA would also address extinguishment of the capital in WesCorp and U.S. Central. However, the release said that issue will be addressed following the release of the analysis for the Clayton Fixed Incomes Services, Inc. Clayton is reviewing private label mortgage-backed securities at U.S. Central and WesCorp. NCUA used the Pacific Investment Management Company (PIMCO) to supplement its own analysis of the corporates, but Clayton’s review will help to more fully inform NCUA of projected loss exposure for the share insurance fund, NCUA said. The Clayton analysis is expected to be complete by the end of this month or early May for posting March 31 statements. CUNA had urged NCUA to hold off making further statements about capital extinguishment until the Clayton analyses are available. Unlike impairment, which is addressed by Generally Accepted Accounting Principles, extinguishment of capital would be determined by NCUA. Once extinguishment has been determined, any recoveries relating to the securities would go to the corporate credit union's retained earnings and would not have to be distributed on the basis of paid-in-capital and member capital accounts at the time of conservatorship, even though such capital would be used for the losses. CUNA questions whether extinguishment for corporate credit unions is appropriate and continues to urge NCUA to consider other alternatives. CUNA will continue to urge NCUA to provide more information to credit unions on its loss estimates for the two conserved corporate credit unions and how those estimates are determined.