Rather than divest investments, known as collateralised debt obligations (CDOs), many councils have held on in the hope the market will recover.

But the economic uncertainty in the US and the eurozone crisis means councils have been unable to recoup losses, let alone turn a loss into a profit.

Last month, a major CDO in which many NSW councils had invested defaulted following the bankruptcy of American mortgage insurer PMI Group.

Documents show more losses will follow as the euro crisis deepens and the US economy continues to stall.

Councils, churches and charities across Australia have lost about $1 billion since the GFC hit in 2008 due to CDOs – junk bonds that were wrapped in AAA-rated bonds to create a new product.

Gosford Council’s $24 million in CDOs is now worth $1.4 million while Wingecarribee Council’s $14.7 million is today valued at $1.2 million.

Port Macquarie Hastings Council lost $6.4 million and its remaining $6 million of CDOs have a book loss of $4.7 million.

Hurstville Council has losses of $9 million post GFC.

Coffs Harbour Council has realised losses of $8.8 million since 2007. Latest documents show Coffs Harbour has $4.7 million in CDOs, which have mostly defaulted, now worth $892,308 with a “high risk” the capital won’t be returned.

But while those were among the most exposed, the true figure of how much they have lost cannot be calculated.

“Nobody can put a figure on it,” University of Wollongong academic Greg Jones said.

“If you have $10 million invested for three years and get no return, that is a loss as far as I am concerned. What the net losses are no one is game to say until they mature.”

Councils defended their decision to keep the CDOs because they were “nearly impossible” to offload. “

“It was like a game of pass the parcel. Unfortunately most councils ended up being the last person with the parcel and no one wanted to take it off them,” Mr Jones said.

John Walker, executive director of law firm IMF, which took a class action against Lehman Brothers Australia to the High Court, said councils, churches and charities invested $4 billion in CDOs before the market froze.

“About 25 per cent of the investment has been lost and losses are increasing,” he said.

“About half of those losses were in respect to CDOs distributed by Lehman Brothers Australia. There are churches, councils and charities with potential claims against Lehman Brothers of $600 million. But Lehman only has assets of $200 million.”