The National Credit Union Association (NCUA) has accepted a judgment for $33 million, plus pre-judgment interest, from Swiss banking giant UBS AG to resolve claims from losses related to purchases of residential mortgage-backed securities (MBS).
This is NCUA’s latest recovery from legal action following the corporate credit union crisis. More than $2.4 billion in legal recoveries have been obtained, and those funds are used to pay down the Temporary Corporate Credit Union Stabilization Fund assessments which were levied on credit unions to cover the losses of the five failed corporates.
When the agreement becomes finalized, it will resolve one of a number of lawsuits that NCUA has filed against various big banks related to the sale of MBS prior to the financial crisis of 2008.
NCUA had claimed that the securities offering documents had contained “untrue statements” that the loans had been originated in tandem with underwriting guidelines. As such, this made the securities riskier than believed, leading to “significant losses” incurred by the credit unions that purchased the MBS.
NCUA has a similar lawsuit against UBS that is pending in the state of Kansas, which is not affected by the latest development.
Read the full story from the CU Journal.