NCUA garners $445 million in latest action against UBS
The National Credit Union Administration on Monday said it has received an additional $445 million from Swiss banking giant UBS.
This latest recovery comes on behalf of U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, and is for claims arising from losses related to purchases of residential mortgage-backed securities by those corporate credit unions.
The settlement covers claims asserted in 2012 by NCUA as liquidating agent for U.S. Central Federal Credit Union and Western Corporate Federal Credit Union in federal district court in Kansas. In connection with the settlement, NCUA will dismiss its pending suit against UBS, which does not admit fault as part of the agreement.
In April 2016, NCUA recovered $79.3 million from UBS for losses sustained by two other corporate federal credit unions, Members United and Southwest.
NCUA said total recoveries from financial institutions the agency alleged sold faulty securities to five corporate credit unions, leading to their collapse, have reached nearly $4.8 billion.
“This latest recovery, together with prior recoveries, has helped shield credit unions from greater Stabilization Fund assessments and provided a measure of accountability for the firms that sold faulty securities to the corporate credit unions,” NCUA Acting Board Chairman J. Mark McWatters said in a statement. “It remains incumbent on NCUA to provide transparency in terms of the settlements, the legal fees and other costs that go with them, and how these affect the Stabilization Fund.”
NCUA said it was the first federal financial institutions regulator to recover losses from investments in these securities on behalf of failed financial institutions. Net proceeds from recoveries are used to pay claims against the five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.
The regulator still has pending litigation against various residential mortgage-backed securities trustees and LIBOR banks related to corporate credit union losses.
NCUA makes detailed information on its legal recoveries in cases related to the failure of the five corporate credit unions available online. The breakdown of the net recoveries posted on the webpage will be updated when information about fees and expenses is processed.
For those wondering if another recovery means a possible rebate, recall during NCUA's December 2016 board meeting officials said repeatedly that due to accounting and legal reasons, credit unions are unlikely to see assessments refunded until the Corporate System Resolution Program ends in 2021. (The same applies for institutions that held depleted capital in one or more of the failed corporates).
Credit unions paid five assessments to the Temporary Corporate Credit Union Stabilization Fund, totaling $4.8 billion. No further assessments are projected at this time, NCUA has said.