A suit filed by Space Coast Credit Union against several Wall Street banks andratings agencies over claims it lost more than $100 million fromcollateralized debt obligations that were sold to Eastern Financial Florida Credit Union, was recently put onhold.

The U.S. District Court for the Southern District of Floridasaid this week it would need more time to review the banks' andrating agencies' motion for dismissal.

Among the banks named in the Space Coast suit were Wells FargoSecurities, formerly known as Wachovia Capital Markets, J.P. MorganSecurities, formerly known as Bearn Stearns & Co. Inc., MerrillLynch and its subsidiary, Merrill Lynch Home Loans, UBS Securities,and Barclay's Capital Inc. Other defendants named were Richard S.Fuld Jr., former chairman/CEO of Lehman Brothers, and Moody'sInvestors Service Inc.

Eastern Financial Florida was conserved by the NCUA in 2009 andmerged soon after with Space Coast.

In its complaint filed in early 2012, the $3 billion Space Coastin Melbourne, Fla., said the CDOs led to a phony demand forresidential mortgage loans, which also led to creating one of thestate's largest housing catastrophes.

Space Coast said creating and selling CDOs revolved around shoe-horning residential mortgagesecurities into Moody's and S&P's credit rating models togenerate investment grade ratings, according to the CU's suit.Investors were misled because they relied on the credit ratings,the credit union said.

In May 2011, Space Coast filed a suit against Barclays saying the $10 million worth of the firm's Markov CDOsbought by Eastern Financial Florida were based on riskier syntheticassets. The purchase allegedly led to losses on the entireinvestment.

Last spring, the Wall Street banks told a federal court judge inMiami that Eastern Financial was warned about the risks associated with CDOs.

“Each of the 12 CDOs at issue here was offered pursuant to aseparate offering circular. These offering circulars contained pageafter page of disclosures and disclaimers, explaining to EasternFinancial the nature and risks of the particular CDO investments,the place of each tranche within each CDO, and the credit ratingexpected to be assigned by the rating agencies of each tranche,”according to a joint motion from the banks and ratings agencies todismiss the suit.

A separate U.S. Department of Justice suit filed this weekagainst the S&P and other firms claimed the agency assignedfalse high ratings on the CDOs in exchange for payments fromseveral of its Wall Street clients.