NCUA on Thursday said it has reached a settlement with Morgan Stanley, as the company agreed to pay $225 million to resolve claims arising from losses related to corporate credit unions' purchases of faulty residential mortgage-backed securities.

The Morgan Stanley settlement follows a similar agreement with Barclays Capital in October that resulted in a recovery of $325 million. NCUA accepted a judgment offer of $129.6 million from Royal Bank of Scotland in September.

The deal with Morgan Stanley covers claims asserted in 2013 by NCUA on behalf of U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union. NCUA said it agreed to dismiss pending suits against Morgan Stanley in federal district courts in New York and Kansas.

Morgan Stanley does not admit fault in the settlement.

According to NCUA, net proceeds from this settlement and others are used to pay claims against the failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. Stabilization Fund recoveries reduce borrowings from the U.S. Treasury and eliminate the need for assessments to federally insured credit unions, the credit union regulator said.

"NCUA continues to pursue recoveries on behalf of the corporate credit unions against the financial firms we maintain contributed to the corporates’ losses," NCUA Board Chairman Debbie Matz said in a statement. "These actions fulfill our statutory obligation to act in order to minimize costs to the credit union system resulting from the crisis. They also promote accountability and ensure consumers remain protected."

John Ianno, NCUA's associate general counsel, recognized the U.S. Justice Department's involvement in the litigation. "We appreciate the efforts of the Department of Justice, with whom we have worked closely in achieving this favorable resolution," Ianno said.

Carrie Hunt, NAFCU's executive vice president of government affairs and general counsel, on Thursday released a statement saying the trade association welcomed NCUA's announcement of the Morgan Stanley settlement.

"NAFCU and our members thank NCUA for its aggressive litigation and recovery efforts on behalf of credit unions," said Hunt. "We look forward to these recoveries ultimately flowing back to credit unions as soon as possible."

The credit union regulatory says it was the first federal regulatory agency for depository institutions to recover losses from investments in these securities on behalf of failed financial institutions.

NCUA continues to pursue litigation in federal courts in New York, Kansas and California against financial firms, including RBS, Goldman Sachs, UBS and Credit Suisse, based on the sale of faulty securities that caused the collapse of five corporate credit unions.

The agency, on behalf of the failed corporates, has other litigation pending against securities firms alleging violations of state and federal anti-trust law by manipulation of interest rates through the London interbank offer rate system. NCUA also has pending suits against financial firms alleging their failure to perform their duties as trustees of residential mortgage-backed securities trusts.

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