ALEXANDRIA, Va. (May 1, 2017) – The National Credit Union Administration, on behalf of U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, has received $445 million from UBS for claims arising from losses related to purchases of residential mortgage-backed securities by those corporate credit unions.
“This latest recovery, together with prior recoveries, has helped shield credit unions from greater Stabilization Fund assessments and provided a measure of accountability for the firms that sold faulty securities to the corporate credit unions,” NCUA Acting Board Chairman J. Mark McWatters said. “It remains incumbent on NCUA to provide transparency in terms of the settlements, the legal fees and other costs that go with them, and how these affect the Stabilization Fund.”
NCUA in April 2016 recovered $79.3 million from UBS for losses sustained by two other corporate federal credit unions, Members United and Southwest. NCUA’s recoveries from financial institutions the agency alleged sold faulty securities to five corporate credit unions, leading to their collapse, have reached nearly $4.8 billion.
NCUA was the first federal financial institutions regulator to recover losses from investments in these securities on behalf of failed financial institutions. Net proceeds from recoveries are used to pay claims against the five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.
The settlement covers claims asserted in 2012 by the NCUA Board as liquidating agent for U.S. Central Federal Credit Union and Western Corporate Federal Credit Union in federal district court in Kansas. In connection with the settlement, NCUA will dismiss its pending suit against UBS, which does not admit fault as part of the agreement.
NCUA still has pending litigation against various residential mortgage-backed securities trustees and LIBOR banks related to corporate credit union losses.
NCUA makes detailed information on its legal recoveries in cases related to the failure of the five corporate credit unions available online. The breakdown of the net recoveries posted on the webpage will be updated when information about fees and expenses is processed.
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