The NCUA filed suit against Wells Fargo Bank National Association in anattempt to recover more corporate credit union investment losses bysuing trustees. The regulator recently filed suit against Deutsche Bank, U.S. Bank and Bank of America claiming similar legalviolations.

“Like other trustees against whom NCUA is pursuing claims, WellsFargo neglected its statutory and contractual obligations tocertificate holders, including the five corporate credit unions,”NCUA Board Chairman Debbie Matz said. “This litigation is intendedto hold Wells Fargo accountable for losses caused by thatneglect.”

Wells Fargo was a trustee for 27 residential mortgage-backedsecurities trusts.

The agency was the liquidating agent for five failed corporatecredit unions, including WesCorp, U.S Central, Members United,Southwest and Constitution. The corporate credit unions boughtroughly $2.4 billion in residential mortgage-backed securitiesissued from the trusts between 2004 and 2007, which ultimately lostconsiderable value.

“Defendant's failures resulted in the trusts and certificateholders suffering losses rightfully borne by other parties,” thecomplaint said.

“Had Defendant adequately performed its contractual andstatutory obligations, breaching loans would have been removed fromthe loan pools underlying the certificates and returned to theresponsible party. Defendant's improper conduct directly causedlosses to certificate holders like the Plaintiffs,” the complaintalso said.

CUNA General Counsel Eric Richard said CUNA has been encouragingthe NCUA to take all possible actions to maximize recoveries fromthe institutions responsible for events that contributed to thecorporate failures.

“Ultimately, we are hopeful that credit unions will share in thefruits of these efforts when the liquidations of the corporates iscomplete and all funds owing to the Treasury have been repaid,” hesaid.

NAFCU Senior Vice President and General Counsel Carrie Huntapplauded the NCUA for “leaving no stone unturned” in pursuinglegal remedies for losses incurred from the corporate crisis.

“We support NCUA's efforts to seek recoveries from theresponsible entities and hope eventually to have these fundsreturned to the credit unions that paid hefty assessments to coverthe costs of the corporate losses on the mortgage-backedsecurities,” she said.