NCUA Scores $165 Million Securities Settlement with Bank of America
The NCUA said Tuesday that it has chalked up a $165 million win against Wall Street, reaching a settlement with Bank of America and some of its subsidiaries over residential mortgage backed securities losses at failed corporate credit unions.
Bank of America did not admit fault as part of the settlement, the NCUA said in its announcement.
“As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions,” said NCUA Board Chairman Debbie Matz. “These settlements and our ongoing lawsuits further NCUA’s goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions.”
In all, NCUA has recovered more than $335 million in legal settlements, which includes three similar, previously reached agreements with Citigroup, Deutsche Bank Securities and HSBC worth $170.75 million.
Those figures do not include fees due attorneys under a contingency agreement with NCUA to handle the suits.
According to Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, the NCUA’s contracted law firms are collecting 25% of settlement recoveries.
In February, the NCUA’s Inspector General told Issa in a February 2013 report that the NCUA’s contingency agreements were reasonable.
Using the 25% legal fee estimate, of the $335 million recovered, $83.75 million would be paid to attorneys, with the balance of $251.25 million being applied toward corporate stabilization costs.
That’s almost one-third of the 2012 corporate assessment collected from federally insured credit unions, and could provide some assessment relief to credit unions.
NCUA Public Affairs Specialist John Fairbanks said the settlement funds have already been collected by the federal insurer. Currently, the 2013 assessment is estimated to be between 8 and 11 basis points. In 2012, an assessment of 9.5 basis points raked in $800 million.
NCUA has filed lawsuits against several other firms, including Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear, Stearns, alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.