The Wall Street Journal dropped the bombshell: "Banks Hit for Credit Union Ills," read the headline on an article reporting that the NCUA was in talks with a bevy of Wall Street powerhouses (Goldman Sachs, Merrill Lynch, Citigroup and JPMorgan Chase) about the NCUA's belief that Wall Street banks sold corporate credit unions fraudulently mislabeled bonds that underestimated the degree of risk associated with the instruments.

The rest of the story is that when various corporate credit unions imploded–notably WesCorp and U.S. Central–billions of dollars vanished in bad investments. Now, the NCUA wants the Wall Street banks to make good on the toxic instruments they sold or face possible lawsuits.

That NCUA was contemplating this action for some months apparently was well known inside the Beltway, according to sources that asked not to be named.