ALEXANDRIA, Va.—NCUA Thursday announced that 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.
NCUA noted that the Credit Suisse judgment is not a final settlement; that awaits the court’s determination of interest and an agreement among parties on attorney’s fees.
The NCUA board initiated litigation as liquidating agent for the failed corporate credit unions. 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 will continue to meet its statutory obligation to secure recoveries for credit unions and ensure consumers remain protected,” NCUA Board Chairman Debbie Matz said. “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.”
NCUA has now 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 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 also has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses.
NAFCU recognized NCUA for its “diligent litigation efforts,” saying it “welcomes the recovery of the funds on the sale of faulty securities that precipitated the downfall of five corporate credit unions.”
“NAFCU continues to urge the agency to not only maintain its persistent legal recovery campaign but to be fully transparent with the industry as to how these recoveries will eventually be returned to credit unions,” said Executive Vice President of Government Affairs and General Counsel Carrie Hunt.