The Department of Justice announced Tuesday a $1.417 billion settlement for the NCUA with JP Morgan over failed corporate credit union investments.
The settlement resolves lawsuits the agency filed as liquidating agent against JPMorgan Chase, Bear Stearns and Washington Mutual for losses incurred by corporate credit unions as a result of the purchases of the faulty residential-backed mortgage securities.
“Today’s announcement by the Justice Department is extraordinary and will greatly benefit credit unions that have been paying for the losses caused by the financial institutions covered by this settlement,” NCUA Board Chairman Debbie Matz said in a release.
“This resolution, combined with the $335 million already recovered, will enable NCUA to greatly reduce the assessments that all credit unions have to pay,” Matz said.
“All this really comes down to holding responsible parties accountable,” she said. “In agreeing to this settlement, the world’s largest bank has taken a measure of responsibility for actions that caused severe damage to the credit union system. NCUA remains committed to fulfilling our statutory responsibilities to protect the credit union system by pursuing further recoveries against other Wall Street investment firms on behalf of credit unions and their members.”
The NCUA portion is part of an overall $13 billion settlement with JP Morgan.
Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS.
The NCUA sued JP Morgan Securities in June 2011 to recuperate more than $800 million in losses to corporate credit unions.
“NCUA has a responsibility to do everything in our power to seek maximum recoveries from those involved in the issuing, underwriting and sale of the faulty securities that resulted in the failures of five of the largest wholesale credit unions,” Matz said in June 2011.
“Those who caused the problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions,” the board chair said.
The settlement was first reported last month but the agency would not confirm it then.