ALEXANDRIA, Va,–Barclay’s Capital has agreed to pay $325 million as part of a settlement with NCUA to resolve claims arising from losses related to purchases of faulty residential mortgage-backed securities by corporate credit unions.
NCUA filed suit against Barclay’s, the U.S. subsidiary of the British financial services firm, in 2012. Once the settlement is completed, NCUA will dismiss pending suits against the firm in federal district courts in New York and Kansas. Barclay’s does not admit fault in the settlement.
NCUA reported it continues to pursue litigation in federal courts in New York, Kansas and California against financial firms, including Goldman Sachs, UBS, Credit Suisse and Morgan Stanley, based on the sale of faulty securities that caused the collapse of five corporate credit unions.
“In order to help minimize losses and future costs to the credit union system, NCUA is committed to pursuing recoveries against financial firms we maintain contributed to the corporate crisis,” NCUA Board Chairman Debbie Matz said. “The agency has a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected, and we take that responsibility very seriously.”
The agency has other litigation pending against securities firms alleging violations of state and federal anti-trust law by manipulation of interest rates through the London Interbank Offer Rate (LIBOR) system. NCUA also has pending suits against financial firms alleging their failure to perform their duties as trustees of residential mortgage-backed securities trusts.
NCUA uses the net proceeds to reduce Temporary Corporate Credit Union Stabilization Fund assessments charged to federally insured credit unions to pay for the losses caused by the failure of five corporate credit unions.
In response to the announcement of the settlement NAFCU's SVP/General Counsel Carrie Hunt said, “We appreciate NCUA’s diligence and welcome the recovery of the funds on the sale of faulty securities that precipitated the downfall of five corporate credit unions. NAFCU continues to encourage the agency to not only maintain its persistent legal recovery campaign, but we also urge NCUA to be fully transparent with the industry as to how these recoveries will eventually be returned to credit unions.”