In a sweeping order that delays proceedings on eight pendingNCUA lawsuits against Wall Street banks over mortgage-backedsecurities sold to failed corporate credit unions, U.S. DistrictJudge John W. Lungstrum said this week he will wait for the resultof an appeals court ruling, citing concerns about the time andexpense of litigation.

“The 1oth Circuit's opinion (applied to each of these cases)could result in the dismissal of all claims with respect to anumber of certificates, including the dismissal of all claimsagainst certain defendants,” the Kansas City, Kan.-based Lungstrumwrote Monday in reference to the U.S. Court of Appeals for the 10thCircuit.

That appellate court is scheduled to hear oral arguments on tworelated NCUA securities cases in Denver on May 8.

The stay of proceedings applies to NCUA suits against RBSSecurities, Wachovia Capital Markets, J.P. Morgan Securities, UBSSecurities, Barclays Capital, Credit Suisse, Bear, Stearns &Co. and JPMorgan Chase Bank.

All sold securities to the failed U.S. Central FCU, which waslocated in Lenexa, Kan. The NCUA claims the banks did not fullydisclose the risks associated with the securities.

In opposing the stay, the NCUA said the delay could bedetrimental to the discovery process.

However, Lungstrum said the time and expense that could beavoided if the appeals court rules in favor of the appealing banks“significantly outweigh” the NCUA's concerns.

The bank defendants have argued that the NCUA failed to file thesuits within a three-year statuteof limitations that they say began when U.S. Central and othercorporates first purchased the mortgage backed securities. However,the NCUA has countered that the statute of limitations should havebegun when it placed the corporates into conservatorship.

The NCUA has come under criticism for entering into contingencyagreements with law firms handling the cases. Rep. DarrelIssa (R-Calif.) asked NCUA Inspector General William DeSarno inOctober 2012 to determine if the NCUA violated Executive Order13433, which prohibits federal agencies from entering intocontingency agreements.

DeSarno said the NCUA did not violate the executive order, and further said the feescharged by the firms were reasonable.

Despite the criticism, should the cases be dismissed, the NCUA'scontingency agreements might be a blessing, because attorneystypically only collect a percentage of the settlement, rather thanbilling by the hour.

To date, the NCUA has collected $335 million in settlements from suits over securities sold tofailed corporates.