ALEXANDRIA, Va. (3/25/16)--The National Credit Union Administration (NCUA) accepted a $29 million offer of judgment Thursday from Credit Suisse to resolve claims arising for losses related to purchases of residential mortgage-backed securities (RMBS). The NCUA initiated litigation as liquidating agent for five failed corporate credit unions.
According to the NCUA, it has agreed to Credit Suisse’s offer, but the number does not represent a final settlement. The offer of judgment includes $29 million in damages plus prejudgment interest in an amount to be determined by the court. It also includes reasonable attorneys’ fees to be determined by agreement between the parties or by the court.
The NCUA has now obtained more than $2.5 billion in legal recoveries in securities cases. Net proceeds are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. (See related story: TCCUSF ends 2015 with positive $540.4M net position.)
Recoveries by the fund reduce the likelihood of assessments charged to federally insured credit unions to pay for the losses caused by corporate credit union failures. NCUA Chair Debbie Matz said at Thursday’s board meeting that future assessments are unlikely.
The NCUA still has litigation pending in federal court in Kansas against Credit Suisse for sales of faulty RMBS to U.S. Central and Southwest corporate credit unions. It also has lawsuits pending against several other firms based on the sale of faulty securities.
NCUA also has pending litigation against various RMBS trustees and Libor banks related to corporate credit union losses.