ALEXANDRIA, Va.—As CUToday.info first reported, NCUA has settled with the Royal Bank of Scotland to resolve claims that it sold toxic mortgage-backed securities to the now-failed Southwest Corporate FCU and Members United Corporate CU.
The agency has now issued a statement addressing the agreement in which RBS will pay $129.6 million to the agency.
“NCUA has a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected,” NCUA Board Chairman Debbie Matz said in a release. “We can assure stakeholders that we will continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis. Each recovery as well as our ongoing lawsuits further NCUA’s goal of minimizing the losses of the corporate crisis and future costs to credit unions.”
In the suit filed against RBS, NCUA claimed it had ignored underwriting guidelines for the securities, which were rated triple-A at the time they were purchased by the credit unions for a total of more than $300 million in 2006 and 2007.
NCUA said it has now obtained approximately $1.9 billion in legal recoveries, using 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.
NCUA still has litigation pending in federal courts in Kansas and California against Royal Bank of Scotland for sales of faulty residential mortgage-backed securities to U.S. Central and WesCorp. The agency also has lawsuits pending against Goldman Sachs, Wachovia, UBS, Barclays, Credit Suisse and Morgan Stanley based on the sale of faulty securities, causing the collapse of five corporate credit unions. NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in these securities on behalf of failed financial institutions.