NCUA today released a summary of its analysis of distressed securities held by U.S. Central FCU and Western Corporate FCU, posted on the agency's Web site under corporate stabilization. (www.ncua.gov)

The report shows U.S. Central and WesCorp suffered from ratings declines, but also are victims of their own strategies of investing in increasing concentrations of mortgage backed securities.

Additionally, NCUA expanded upon accusations that WesCorp management made poor use of its auditors.

"WesCorp's own external vendor analysis resulted in a credit loss estimate more than $500 million greater than WesCorp's internal estimates," the report stated of year-end 2008 financials. "Furthermore, the credit loss projections for these securities made by WesCorp's external vendor were within a range of $175 million of the credit loss projections made by NCUA's outside vendor. WesCorp's senior management was prepared to report an OTTI number based on the lower internal analysis estimate."

All but 1% of U.S. Central's securities were rated AAA and AA at time of purchase, but agencies have since downgraded 31% to below non-investment grade as of February 23.

Despite calling those ratings unreliable, the agency provided Moody's loss estimates as documentation of how it determined securities values.