The NCUA said Monday it has reached settlements totaling $165.5 million with Citigroup and Deutsche Bank Securities over the sales of residential mortgage-backed securities to the five corporate credit unions that failed.
The settlements, in which the banks admitted no guilt, are for $20.5 million from Citigroup and $145 million from Deutsche Bank Securities. The agency reached the settlements without filing lawsuits against the banks.
"We are fulfilling our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected," said NCUA Board Chairman Debbie Matz.
The agency will use the money to lower the future costs to natural person credit unions for rescuing the corporates.
The agency has lawsuits pending against J.P. Morgan Securities, RBS Securities and Goldman Sachs for not fully disclosing the risks when it sold RMBs to the corporates.
The agency has filed two suits against RBS Securities, one for $685 million and one for $565 million. It is suing Goldman Sachs for $491 million. And it sued J.P. Morgan Securities, for $278 million in damages.
The collapse of the housing market caused the value of those securities to plummet, leading to massive losses to the corporates.
That convergence of events required the NCUA to rescue some of them, with the help of a loan from the Treasury Department. The credit union system is paying for the rescue through annual assessments. This year's assessment was 25 basis points. The agency has estimated that next year's assessment will be between 8 and 11 basis points.
The corporate credit unions that failed are U.S. Central, Western Corporate, Members United, Southwest Corporate and Constitution Corporate.
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