NCUA suits against JPMorgan, UBS can proceed
Sept. 5, 2013 – A U.S. district court judge ruled Tuesday that NCUA may continue to pursue some claims against JPMorgan Chase and UBS Securities over the sale of residential mortgage-backed securities that helped bring down several corporate credit unions, including U.S. Central and WesCorp.
NCUA is seeking to recover the corporates’ losses on securities that tanked during the housing crisis – and for which federally insured credit unions are paying now. In rulings issued Sept. 3, the U.S. District Court for the District of Kansas dismissed claims regarding about half of the securities identified in the suits but is allowing cases to proceed on the rest.
In all three cases, the court addresses NCUA’s assertion of an “extender” statute that affects the time limit for a conservator’s filing of claims. An appeals court has previously ruled some of NCUA’s claims were filed too late even under this statute, but the district court, on review, found this did not apply with respect to all the securities sold by the defendant banks.
NCUA spokesman John Fairbanks, as quoted by Reuters, said NCUA is pleased it can proceed with these cases. He said a federal appeals court in Denver was also reviewing the statutes of limitations regarding other of the agency’s claims (see story).
NCUA has filed 11 lawsuits so far against firms that sold RMBS to the now-defunct corporates and has reached $335 million in settlements with four of the banks. The largest settlement, for $165 million, was reached in April with Bank of America.
NAFCU is encouraging NCUA to use all means available to it to recover losses and mitigate the costs of corporate stabilization on insured credit unions.