Do lawsuits filed by the California Public Employees' Retirement System against ratings agencies Moody's and Standard & Poor's mean credit unions can also sue over AAA-rated corporate securities turned junk?
Not likely, according to CUNA's legal staff, who looked into the case and shared their opinion with the Credit Union Times.
CalPERS is suing over three structured investment vehicles that collapsed and resulted in $1 billion in losses. The SIVs invested in CDOs and other investments similar to corporate investments, CUNA spokesman Pat Keefe said.
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However, he said CUNA's legal opinion is that the case would only be relevant to credit unions if corporates responsible for stabilization costs also invested in the commercial paper or medium-term debt issued by one or more of these three particular SIVs.
"We are not aware of U.S. Central, WesCorp, or any other corporate credit union having invested in any SIV debt obligations of any type, especially not commercial paper or other debt that was not in the form of a security (and commercial paper is usually not a security because of its short duration)," Keefe said.
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