Several Wall Street's biggest banks were recently hit with alawsuit from Space Coast Credit Union over claims it lost more than$100 million from collateralized debt obligations that were sold toEastern Financial Florida Credit Union.

The $3 billion Space Coast in Melbourne, Fla., acquired thefinancially troubled Eastern Financial Florida CU in 2009 after it was placed inconservatorship and issued a cease and desist order forquestionable loan practices.

In its complaint, Space Coast said the CDOs led to a phonydemand for residential mortgage loans, which also led to creatingone of the state's largest housing catastrophes.

Space Coast said creating and selling CDOs revolved around shoe-horning residential mortgagesecurities into Moody's and S&P's credit rating models togenerate investment grade ratings, according to the CU's suit.Investors were misled because they relied on the creditratings.

Among the banks named in the suit were Wells Fargo Securities,formerly known as Wachovia Capital Markets, J.P. Morgan Securities,formerly known as Bearn Stearns & Co. Inc., Merrill Lynch andits subsidiary, Merrill Lynch Home Loans, UBS Securities, andBarclay's Capital Inc. Other defendants named were Richard S. FuldJr., former chairman and CEO of Lehman Brothers, and Moody'sInvestors Service Inc.

In May 2011, Space Coast filed a suit against Barclays saying the $10 million worth of the firm's Markov CDOsbought by Eastern Financial Florida were based on riskier syntheticassets. The purchase allegedly led to losses on the entireinvestment.

A comment from Space Coast was not immediately available.