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December 23, 2014
NCUA sues MBS trustee Wells Fargo
NCUA on Tuesday announced it has filed a lawsuit against Wells Fargo Bank National Association, saying the bank failed to follow through on its legal duty as trustee for 27 residential mortgage-backed securities trusts.
"Like other trustees against whom NCUA is pursuing claims, Wells Fargo neglected its statutory and contractual obligations to certificate holders, including the five corporate credit unions," NCUA Board Chairman Debbie Matz said in a statement. "This litigation is intended to hold Wells Fargo accountable for losses caused by that neglect."
The now-defunct U.S. Central, WesCorp, Members United, Southwest and Constitution corporate credit unions bought about $2.4 billion in RMBS issued from the trusts between 2004 and 2007. NCUA charges that those securities lost value, contributing to the failure of all five corporates.
In previous suits, NCUA charged that Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear Stearns violated federal and state securities laws in their sale of RMBS to the five corporates. It has settled claims worth more than $335 million with Citigroup, Deutsche Bank Securities, HSBC and Bank of America.
"NAFCU appreciates NCUA's vigor in leaving no stone unturned in pursuing legal remedies to make credit unions whole for the losses they incurred as a result of the collapse of corporate credit unions," said NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt. "We support NCUA's efforts to seek recoveries from the responsible entities and hope eventually to have these funds returned to the credit unions that paid hefty assessments to cover the costs of the corporate losses on the mortgage-backed securities."
NCUA says no future stabilization assessments appear to be on the horizon. Meanwhile, final costs for the Temporary Corporate Credit Union Stabilization Fund and completion of the NCUA Guarantee Note program will affect any return to credit unions after the fund expires in 2021 and the NGN program is concluded.
NCUA's complaint is available online here.
"Like other trustees against whom NCUA is pursuing claims, Wells Fargo neglected its statutory and contractual obligations to certificate holders, including the five corporate credit unions," NCUA Board Chairman Debbie Matz said in a statement. "This litigation is intended to hold Wells Fargo accountable for losses caused by that neglect."
The now-defunct U.S. Central, WesCorp, Members United, Southwest and Constitution corporate credit unions bought about $2.4 billion in RMBS issued from the trusts between 2004 and 2007. NCUA charges that those securities lost value, contributing to the failure of all five corporates.
In previous suits, NCUA charged that Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear Stearns violated federal and state securities laws in their sale of RMBS to the five corporates. It has settled claims worth more than $335 million with Citigroup, Deutsche Bank Securities, HSBC and Bank of America.
"NAFCU appreciates NCUA's vigor in leaving no stone unturned in pursuing legal remedies to make credit unions whole for the losses they incurred as a result of the collapse of corporate credit unions," said NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt. "We support NCUA's efforts to seek recoveries from the responsible entities and hope eventually to have these funds returned to the credit unions that paid hefty assessments to cover the costs of the corporate losses on the mortgage-backed securities."
NCUA says no future stabilization assessments appear to be on the horizon. Meanwhile, final costs for the Temporary Corporate Credit Union Stabilization Fund and completion of the NCUA Guarantee Note program will affect any return to credit unions after the fund expires in 2021 and the NGN program is concluded.
NCUA's complaint is available online here.
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