The National Credit Union Administration on Thursday said it has accepted a $29 million offer of judgment from Credit Suisse to resolve claims arising from losses related to purchases of residential mortgage-backed securities by Members United and Southwest Corporate Credit Unions.
The NCUA board initiated litigation as liquidating agent for the failed corporate CUs.
The regulator noted the offer of judgment includes $29 million in damages plus prejudgment interest in an amount to be determined by the court, as well as reasonable attorneys' fees to be determined by agreement between the parties or by the court.
NCUA still has 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. NCUA likewise has pending litigation against various RMBS trustees and Libor banks related to corporate credit union losses.
The agency noted it was the first federal financial institutions regulator to recover losses from investments in these securities on behalf of failed financial institutions. NCUA said it now has obtained more than $2.5 billion in legal recoveries in securities cases. Net proceeds are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. NCUA said recoveries by the Stabilization Fund reduce the likelihood of assessments charged to federally insured credit unions to pay for the losses caused by corporate credit union failures.
The Credit Suisse offer and acceptance follows a similar agreement last month, when NCUA accepted a judgment for $33 million, plus prejudgment interest, from Swiss banking giant UBS AG.
"NCUA will continue to meet its statutory obligation to secure recoveries for credit unions and ensure consumers remain protected," Debbie Matz NCUA board chairman, said in a statement. "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."
