The price paid for the securities by US Central and WesCorp exceeded $1.1 billion. Both corporate credit unions subsequently failed.
NCUA has previously filed five similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, and Wachovia. NCUA has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities, andHSBC, making it the first federal regulatory agency for depository institutions to recover losses on behalf of failed financial institutions that resulted from investments in faulty securities.
As liquidating agent for US Central and WesCorp, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.
Recoveries from these six additional legal actions would further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions. Thus, any recoveries would help to reduce the amount of future assessments on credit unions.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Natural person credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
The complaint is posted to NCUA’s website at: http://www.ncua.gov/News/Press/NW20120906UBSComplaint.pdf.