The NCUA has threatened to sue four investment banks if they don't refund $50 billion from the sale of mortgage-backed securities to five corporate credit unions that the agency conserved last year, The Wall Street Journal reported today.
When asked about the agency's conversations with Citigroup, Goldman Sachs, J.P. Morgan Chase and Merrill Lynch, NCUA spokesman Todd Harper told Credit Union Times that "we don't comment on ongoing legal matters."
Several credit union industry sources confirmed that the NCUA had told them that seeking the money back from the investment banks was a key part of its strategy.
Recommended For You
According to a filing with the Securities and Exchange Commission, Goldman Sachs said the NCUA has "has stated that it intends to pursue…on behalf of certain credit unions for which it acts as conservator" claims that when it offered certain securities Goldman Sachs made "untrue statements of material facts and material omissions."
Many of the securities that the corporates bought were rated as Triple A at the time they were purchased and are now valued as junk.
In 2009 and 2010 the NCUA conserved five corporate credit unions because of extensive losses from their investments in mortgage-backed securities: Constitution Corporate FCU., Members United Corporate FCU, Southwest Corporate FCU, U.S. Central Corporate FCU and Western Corporate FCU.
The losses from the corporates have caused major financial ramifications for the whole industry and required the agency to ask Congress to set up a separate corporate stabilization fund with a loan from the Treasury department. The agency is levying assessments on credit unions to repay the loan.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
