The ""National Credit Union Administration"":http://www.ncua.gov/Pages/default.aspx (NCUA) filed suit Tuesday against Barclay's Capital, Inc., the agency announced in a release.[IMAGE]
The suit, which was filed in federal district court in Kansas, alleges that Barclay's misrepresented mortgage-backed securities it sold to U.S. Central Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp).
According to the complaint, Barclays' omitted facts in the offering documents and systemically disregarded underwriting guidelines stated in the offering documents.
The release stated US Central and WesCorp paid more than $555 million for the securities they believe posed a minimal risk; both credit unions eventually failed.
""Trust and accountability are two cornerstones of our financial system,"" said NCUA Board Chairman Debbie Matz. ""As clearly outlined in our complaint, Barclay's violated that trust by issuing faulty disclosures on securities underwritten by the firm. As a result, two corporate credit unions collapsed, and the entire credit union industry experienced a crisis. Since then, NCUA has successfully worked to restore stability to the credit union system. Now we are working to hold Barclay's, and other responsible parties, accountable for their actions.""
NCUA also filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia and UBS Securities. NCUA settled claims exceeding $170 million with Citigroup, Deutsche Bank Securities, and HSBC.
According to the release, the NCUA is the first federal regulatory agency for depository institutions that has recovered losses from faulty security investments on behalf of failed financial institutions.