Recoveries in Securities Cases Reach More than $2.5 Billion
ALEXANDRIA, Va. (March 24, 2016) – The National Credit Union Administration today announced acceptance of a $29 million offer of judgment from Credit Suisse to resolve claims arising from losses related to purchases of residential mortgage-backed securities by Members United and Southwest corporate credit unions.
The NCUA Board initiated litigation as liquidating agent for the failed corporate credit unions. The offer of judgment includes $29 million in damages plus prejudgment interest in an amount to be determined by the Court as well as reasonable attorneys’ fees to be determined by agreement between the parties or by the Court.
“NCUA will continue to meet its statutory obligation to secure recoveries for credit unions and ensure consumers remain protected,” NCUA Board Chairman Debbie Matz said. “We will continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis with the goals of minimizing net losses of the corporate crisis and providing a future rebate to credit unions.”
NCUA has now obtained more than $2.5 billion in legal recoveries in securities cases. Net proceeds are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. Recoveries by the Stabilization Fund reduce the likelihood of assessments charged to federally insured credit unions to pay for the losses caused by corporate credit union failures.
NCUA still has litigation pending in federal court in Kansas against Credit Suisse for sales of faulty residential mortgage-backed securities to U.S. Central and Southwest corporate credit unions. It also has lawsuits pending against several other firms based on the sale of faulty securities. NCUA also has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses. NCUA was the first federal financial institutions regulator to recover losses from investments in these securities on behalf of failed financial institutions.
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 102 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.
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