The NCUA on April 15 announced a settlement of $69.8 million against UBS for claims stemming from losses of two corporate credit unions.
The settlement stems from litigation against UBS for losses by Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union related to purchases of residential mortgage backed securities. While the amount does not yet include attorneys' fees and expenses, the settlement increased from the original amount accepted by the regulator in February from $33 million in damages.
"Part of [the] NCUA's comprehensive strategy for resolving the corporate crisis has been an aggressive litigation effort to secure recoveries from the Wall Street firms whose sale of faulty securities precipitated the crisis," NCUA Board Chairman Debbie Matz said. "Because of our ongoing efforts to hold responsible parties accountable, we are minimizing net losses to credit unions and should ultimately be able to provide a future rebate to credit unions for their Temporary Corporate Credit Union Stabilization Fund assessments."
To date, the NCUA has obtained more than $3.1 billion in legal recoveries in litigation related to the sale of faulty securities to corporate credit unions. The NCUA uses the net proceeds from these settlements to repay the stabilization fund's outstanding borrowings from the U.S. Treasury and to decrease the amount that surviving credit unions must pay to recoup the losses of the corporate credit union system.
Matz said during the March board meeting that refunds to credit unions from the stabilization fund would not be available until 2021.
According to the regulator, it has litigation pending against UBS in federal court in Kansas for sales of faulty residential mortgage-backed securities to U.S. Central Federal Credit Union and Western Corporate Federal Credit Union. Additionally, the agency has lawsuits pending against several other firms based on the sale of faulty securities. The NCUA also has pending litigation against various residential mortgage backed securities trustees and LIBOR banks related to corporate credit union losses.
So far this year, the agency has reached agreements with Credit Suisse for $50.3 million and with Goldman Sachs for $575 million.
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