ALEXANDRIA, Va. – On behalf of the former U.S. Central FCU and Western Corporate FCU (WesCorp), NCUA reported it has received $445 million from UBS for claims arising from losses related to purchases of residential mortgage-backed securities by those corporate credit unions.
The recovery follows by approximately one year the $79.3 million NCUA recovered from UBS for losses sustained by two other former corporate federal credit unions, Members United and Southwest. NCUA’s recoveries from financial institutions the agency alleged sold faulty securities to five corporate credit unions that led to their collapse have now reached nearly $4.8 billion.
“This latest recovery, together with prior recoveries, has helped shield credit unions from greater Stabilization Fund assessments and provided a measure of accountability for the firms that sold faulty securities to the corporate credit unions,” NCUA Acting Board Chairman J. Mark McWatters said in a statement. “It remains incumbent on NCUA to provide transparency in terms of the settlements, the legal fees and other costs that go with them, and how these affect the Stabilization Fund.”
The settlement covers claims asserted in 2012 by the NCUA Board as liquidating agent for U.S. Central Federal Credit Union and Western Corporate Federal Credit Union in federal district court in Kansas. In connection with the settlement, NCUA said will dismiss its pending suit against UBS, which does not admit fault as part of the agreement.
The agency still has pending litigation against various residential mortgage-backed securities trustees and LIBOR banks related to corporate credit union losses.
Additional information on the recoveries are available online.