In a joint settlement with the Department of Justice and other governmental plaintiffs against Goldman Sachs, the NCUA will receive $575 million, bringing its recovered claims from Wall Street firms to more than $3 billion.
The DOJ and the NCUA settled with Goldman Sachs for $5 billion, resolving two lawsuits the regulator filed against the investment firm for losses incurred as a result of purchases of faulty, mortgage-backed securities by corporate credit unions, which later failed.
"Credit unions are benefitting from an aggressive litigation strategy [the] NCUA continues to follow in order to hold responsible parties accountable," NCUA Board Chairman Debbie Matz said. "[The] NCUA remains committed to fulfilling its statutory responsibilities to protect the credit union system and to pursuing recoveries against Wall Street firms that contributed to the corporate crisis. Our goal is to minimize net losses of the corporate crisis and provide a future rebate to credit unions."
The NCUA was the liquidating agent for three corporate credit unions – U.S. Central, WesCorp and Southwest. Net proceeds from these recoveries are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.
"NAFCU and our members appreciate [the] NCUA's persistence in seeking recoveries relative to faulty mortgage-backed securities sold to corporate credit unions," NAFCU Executive Vice President of Government Affairs and General Counsel Hunt said in a statement. "We continue to urge the agency to remain steadfast in its legal recovery efforts and to be completely transparent as to how the monies recovered will be returned to credit unions."
Matz added, "[The] NCUA remains committed to fulfilling its statutory responsibilities to protect the credit union system by pursuing further recoveries against other Wall Street investment firms on behalf of credit unions and their members."
The NCUA still has litigation pending against several other financial institutions, including Credit Suisse, RBS Securities and UBS Securities, alleging they sold faulty mortgage-backed securities to four corporate credit unions: WesCorp, U.S. Central, Southwest and Members United. The NCUA also has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses.
Matz said during the NCUA's March 24 board meeting that refunds from the stabilization fund to credit unions would not be available until 2021. The regulator settled with Credit Suisse for $29 million on April 2.
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