NCUA Files Suit No. 10 Over Corporates Collapse
The NCUA announced late Friday that it has filed its 10th lawsuit against Wall Street over $2.2 billion in toxic mortgage-backed securities that destroyed three major corporate credit unions.
The suit was filed in U.S. District Court in Kansas against J.P. Morgan Securities – as the successor-in-interest after its 2008 purchase of Washington Mutual Bank – as well as WaMu Capital Corp., Long Beach Securities Corp., and WaMu Asset Acceptance Corp.
The suit accuses the firms of violating federal and state securities lawas in the misrepresentation, omission of material facts and abandoning of underwriting guidelines in the MBS sales to U.S. Central, Western Corporate and Southwest Corporate, all of which were subsequently liquidated by the NCUA.
“The damage caused by the actions of firms like Washington Mutual has been extremely expensive to contain and repair, and that job isn’t finished, yet,” said NCUA Board Chairman Debbie Matz.
“All the credit unions we supervise and insure have had to share this burden, so it’s only right that the people who caused the damage be required to pick up that burden, as well,” Matz said in the agency’s Friday evening announcement.
The agency had previously sued J.P. Morgan, as well as Barclays Capital, Credit Suisse, Goldman Sachs, RBS Securities, UBS Securities, Wachovia and Bear, Stearns, and has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.
“Recoveries from these legal actions will further reduce the total losses resulting from the failure of the three corporate credit unions,” the agency said, losses that all federally insured credit unions have to cover through their assessments to the Temporary Corporate Credit Union Stabilization Fund.