ALEXANDRIA, Va.—NCUA reported that it will receive $50.3 million in damages and interest from Credit Suisse for claims arising from losses to Members United and Southwest corporate credit unions related to purchases of residential mortgage-backed securities.
“NCUA’s litigation efforts fulfill its statutory obligation to secure recoveries for credit unions and help protect consumers,” NCUA Board Chairman Debbie Matz said. “These efforts will continue. We will aggressively pursue recoveries against the Wall Street firms that contributed to the corporate crisis and work to minimize net losses and provide a future rebate to credit unions.”
The NCUA board initiated litigation as liquidating agent for the failed corporate credit unions. In March, NCUA accepted Credit Suisse’s offer of judgment of $29 million in damages. With the addition of prejudgment interest determined by the Court, the amount to be paid by Credit Suisse increased to $50.3 million. Credit Suisse will also be liable for attorneys’ fees and expenses in an amount to be determined, NCUA stated.
NCUA has obtained more than $3 billion in legal recoveries in litigation related to the sale of faulty securities to corporate credit unions. Net proceeds from these recoveries are used to pay claims against the failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. Recoveries by the Stabilization Fund reduce the likelihood of assessments charged to federally insured credit unions to pay for the losses caused by corporate credit union failures, the agency reminded.
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, Southwest and WesCorp corporate credit unions. The agency has additional lawsuits pending against several other firms based on the sale of faulty securities. NCUA also has pending litigation against various residential mortgage-backed securities trustees and LIBOR banks related to corporate credit union losses.