Credit Suisse becomes latest to settle with NCUA over credit union RMBS losses
Bank will pay $29 million to failed credit unions
The National Credit Union Administration announced earlier this week that it reached a $29 million settlement with Credit Suisse over losses related to several corporate credit unions’ purchases of faulty residential mortgage-backed securities in the run-up to the financial crisis.
Credit Suisse becomes the latest to settle with the NCUA over the failure of Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union.
In 2013, the NCUA filed suit against Royal Bank of Scotland, Morgan Stanley and eight other institutions over the sale of nearly $2.4 billion in mortgage-backed securities to U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union.
In October 2015, Barclays and Wachovia, now a part of Wells Fargo, said they would pay a total of $378 million to NCUA as part of two separate settlements stemming from losses related to purchases of residential mortgage-backed securities.
The NCUA said that the Credit Suisse settlement stemmed from an offer of judgment includes $29 million in damages plus prejudgment interest in an amount to be determined by the Court as well as reasonable attorneys’ fees to be determined by agreement between the parties or by the Court.
The NCUA said that this settlement with Credit Suisse is only for the Members United and Southwest corporate credit unions, and stated that it still has litigation pending in federal court in Kansas against Credit Suisse for sales of faulty residential mortgage-backed securities to U.S. Central and other corporate credit unions.
“NCUA will continue to meet its statutory obligation to secure recoveries for credit unions and ensure consumers remain protected,” NCUA Board Chairman Debbie Matz said. “We will continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis with the goals of minimizing net losses of the corporate crisis and providing a future rebate to credit unions.”
A spokesperson for Credit Suisse said that the bank is not commenting on the settlement.