Following an agreement reached Thursday with Credit Suisse for $29 million, the NCUA's legal recoveries in securities cases will total $2.5 billion.
The legal recoveries will be used, in part, to pay claims made against the Temporary Corporate Credit Union Stabilization Fund, in turn reducing the likelihood that assessments will be charged to federally insured credit unions to pay for losses caused by corporate credit union failures, according to the NCUA.
The regulator accepted a $29 million offer of judgment from Credit Suisse, which resolved claims resulting from losses related to purchases of residential mortgage-backed securities by corporate credit unions Members United and Southwest.
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The offer of judgment includes $29 million in damages plus prejudgment interest in an amount to be determined by the court, in addition to attorney's fees, which will be determined by an agreement between the parties or the court.
"The 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."
The NCUA board initiated litigation as a liquidating agent for failed corporate credit unions. Net proceeds will be used to pay claims against five failed corporate credit unions, including those of the stabilization fund.
NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt applauded the efforts made by the regulator, but urged the agency to continue its legal recovery and be transparent with the industry as to how the recoveries will eventually be returned to credit unions.
During the NCUA's March board meeting, Matz reiterated that credit union refunds from the stabilization fund will not be available until 2021, after the Corporate Stabilization Fund Quarterly Report is received.
Hunt called upon the regulator to make rebates on credit unions' stabilization assessments available as soon as possible.
The NCUA has further 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. The agency also has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses.
The announcement came five months after the regulator settled with Barclays Bank for $325 million and Wachovia for $53 million.
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