The National Credit Union Administration has filed a suit in court against Deutsche Bank National Trust Company, alleging that it caused the demise of several federal credit unions.
According to NCUA, the bank allegedly violated state and federal laws by failing to fulfill its duties as trustee for 121 residential mortgage-backed securities trusts.
The five credit unions are U.S Central, WesCorp, Members United, Southwest and Constitution.
Those credit unions purchased $140 billion in residential mortgage-backed securities issued from the trusts between 2004 and 2007, which lost value and contributed to the failure of all five corporates.
“Trustees have the basic duty to protect, and Deutsche Bank National Trust Company failed to comply with the duties imposed by federal and state law,” NCUA Board Chairman Debbie Matz said.
“This failure harmed trust beneficiaries, including the corporate credit unions. NCUA will do all it can to pursue appropriate remedies and recoup the losses suffered by the credit union system,” Matz added.