Federal judge George H. Wu this week delivered what could be a fatal blow to the NCUA's suits against big banks that seek to recover billions in losses suffered by corporate credit union investments in mortgage-backed securities when the jurist wrote in a preliminary ruling that the NCUA suit against RBS was out of compliance with applicable statutes of limitations.
Those statutes, said Wu, specify a three-year limit from the time of purchase of the involved securities. That dates back to 2005, in the matter at hand, which is NCUA's suit against RBS over $685 million in MBS losses suffered by the now-defunct WesCorp.
This suit was filed in July 2011.
Observers indicated that, if Wu's ruling prevails, this may throw into doubt the future of similar NCUA suits against GoldmanSachs, JPMorganChase and Wachovia.
At NCUA, a spokesperson offered this comment: “Judge Wu has not issued any final ruling in this matter but rather has issued only tentative findings. We disagree with many of his tentative findings and note that he has requested a full round of additional briefings as well as another hearing to be held in January. We remain confident in our positions and intend to continue to aggressively pursue recovery in this litigation as well as from others responsible for losses to the credit union system.”
A Southern California observer who has closely followed Wu's behavior in the ongoing case of NCUA versus the inside officers at WesCorp indicated that Wu's practice appears to be to file a preliminary ruling, seek comment, and then to make the preliminary ruling final with little change. That is what he did when he dropped the NCUA case against WesCorp's outside directors, for instance.
Wu has indicated he will rule on an RBS motion to dismiss early in 2012.
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