The NCUA announced an agreement with Barclay’s Capital and Wachovia to resolve claims related to purchases of faulty residential mortgage-backed securities by corporate credit unions that resulted in heavy losses. Through the agreement, Barclays will pay $325 million, while Wachovia will pay $53 million. The NCUA then puts those net proceeds toward reducing the Temporary Corporate Credit Union Stabilization Fund assessments.
“In order to help minimize losses and future costs to the credit union system, NCUA is committed to pursuing recoveries against financial firms we maintain contributed to the corporate crisis,” NCUA Board Chairman Debbie Matz said. “The agency has a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected, and we take that responsibility very seriously.”
NCUA filed suit against Barclay’s, the U.S. subsidiary of the British financial services firm, in 2012. Once the settlement is completed, NCUA will dismiss pending suits against the firm in federal district courts in New York and Kansas. NCUA filed suit against Wachovia in 2011. Once the settlement is completed, NCUA will dismiss pending claims against the firm in federal district courts in California, Kansas and New York.
Barclay’s and Wachovia do not admit fault in the settlement. NCUA has now recovered $2.2 billion from banks that sold the faulty mortgage backed securities to the corporate credit unions.