Appeals Court Sides with NCUA

The U.S. 10th Circuit Court of Appeals handed NCUA a victory in its lawsuits against Wall Street firms regarding sales of mortgage-backed securities to corporate credit unions.

The appeals court affirmed last year’s ruling by the Federal District Court in Kansas that a federal “extender” statute, which allowed NCUA, as liquidating agent for five failed corporate credit unions, more time to file its lawsuits, does apply in the cases of the agency’s securities law claims. Defendants in the suits had argued the agency had filed its claims too late and asked the court to dismiss them.

NCUA has filed lawsuits against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear Stearns, alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.

NCUA Board Chairman Debbie Matz today said the regulator is “pleased” with the court’s decision. “We will continue to pursue our claims against firms that sold faulty mortgage-backed securities to corporate credit unions. As liquidating agent for the corporate credit unions, NCUA has a duty to maximize recoveries from responsible parties in order to limit losses to federally insured credit unions.”

The agency noted it has reached $335 million in settlements with Bank of America, Citigroup, Deutsche Bank Securities and HSBC.