The recent announcement of the $5 billion Goldman Sachs settlement over the sales of faulty residential mortgage-backed securities before the crisis has pushed the amount recovered by the National Credit Union Administration (NCUA) from Wall Street firms over RMBS sales above the $3 billion mark, according to an announcement from NCUA.
NCUA was one of the government plaintiffs included in the recent Goldman Sachs settlement with the Department of Justice. As liquidating agent for three credit unions (U.S. Central, WesCorp, and Southwest), NCUA had sued Goldman Sachs for losses incurred as a result of the purchase of RMBS by those three credit unions, which later failed. NCUA is receiving $575 million from Goldman Sachs in the settlement.
“Credit unions are benefiting from an aggressive litigation strategy NCUA continues to follow in order to hold responsible parties accountable,” NCUA Board Chairman Debbie Matz said. “NCUA remains committed to fulfilling its statutory responsibilities to protect the credit union system and to pursuing recoveries against Wall Street firms that contributed to the corporate crisis. Our goal is to minimize net losses of the corporate crisis and provide a future rebate to credit unions.”
“Credit unions are benefiting from an aggressive litigation strategy NCUA continues to follow in order to hold responsible parties accountable.”
NCUA Chairman Debbie Matz
Net proceeds from settlement funds obtained by NCUA will be used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund, the NCUA announced. The NCUA was the first federal financial regulator to recover losses from investments in faulty RMBS by financial institutions which later failed.
After crossing the $3 billion threshold in recoveries related to the sales of toxic RMBS, the NCUA announced that it will receive $69.8 million in damages from UBS for claims arising from losses suffered by two corporate credit unions that purchased RMBS and then failed during the financial crisis, Members United and Southwest. The NCUA also announced it will receive $50.3 million in damages from Credit Suisse for claims related to the purchase of RMBS by those same two corporate credit unions. The Agency still has litigation pending against Credit Suisse in federal court in Kansas for sales of toxic RMBS to corporate credit unions U.S. Central, Southwest, and WesCorp.