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National Credit Union Association Threatens Lawsuit Against 4 Firms

Another lawsuit centered around mortgage securities backed by faulty loans may be brewing.

The ""National Credit Union Administration"":http://www.ncua.gov/Default.aspx (NCUA) has threatened to sue four banks and investment firms unless


they refund more than $50 billion for mortgage-related bonds that went bad, according to the ""_Wall Street Journal_"":http://www.wsj.com.

WSJ reported that ""Goldman Sachs"":http://www2.goldmansachs.com/, ""Bank of America's"":http://www.ml.com/index.asp?id=7695_15125 Merrill Lynch unit, ""Citigroup"":http://www.citigroup.com/citi/homepage/, and ""J.P. Morgan Chase"":http://www.jpmorganchase.com are accused of causing the collapse of five wholesale credit unions: U.S. Central Federal Credit Union, Western Corporation Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union, and Constitution Corporate Federal Credit Union, which the NCUA took control of in 2009 and 2010.

The four firms are accused of misrepresenting the risks of the bonds, which are now worth about $25 billion, which is half of their face value.

Last year the NCUA began selling off some of the bonds to try to recoup some of the losses.

About Author: Joy Leopold


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