The NCUA has settled a complaint about the way HSBC sold mortgage-backed securities to five failed corporate credit unions without having to go to court.
The bank has agreed to pay NCUA $5.25 million in the matter, without admitting fault and the settlement lifts the total the agency has managed to recover from MBS-selling banks to $170.75 million.
The agency said it will use the money to help offset the costs of settling claims against losses from the securities. Credit unions have had to pay assessments to help cover those claims and the agency has taken three banks to court over the losses.
“This is NCUA’s third favorable settlement of actionable claims. We appreciate HSBC’s efforts to resolve potential claims so that we can avoid the expense and delay of litigation,” said NCUA Board Chairman Debbie Matz.
“This settlement furthers our goal to minimize losses and thereby reduce the assessments that all credit unions will have to pay. NCUA will continue to fulfill our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected,” Matz said.
Losses from wholesale credit union failures are paid from the Temporary Corporate Credit Union Stabilization Fund.
Since 2009, the agency reported that it has assessed credit unions $3.3 billion to pay for losses associated with the five corporate credit union failures. Given the current settlement proceeds, projections for remaining assessments range between $1.8 billion and $6.1 billion that must be paid by 2021, the agency said.