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The Department of Justice (DOJ) announced Wednesday that it has reached a $2 billion settlement with Wells Fargo for its loan practices that contributed to the financial crisis. The DOJ says the bank lied about the quality of subprime and Alt-A loans that went into residential mortgage-backed securities (RMBS).

In 2005, Wells Fargo began an initiative to increase its originations of subprime and Alt-A loans that included loosening requirements for stated income loans in which a borrower does not need to provide documentation to prove income.

Despite internal testing that revealed "unacceptable" levels of variance between the stated and actual income of borrowers for a majority of the loans, the DOJ says that Wells Fargo didn't disclose the information and reported false debt-to-income ratios in connection with the loans it sold.

The DOJ has determined that almost half of Wells Fargo's 73,539 stated income loans included in RMBS between 2005 and 2007 have since defaulted, costing investors billions of dollars.

Relatedly, the NCUA, at NAFCU's urging, has also pressed hard to receive legal recoveries on behalf of five failed corporate credit unions that purchased faulty RMBS ahead of the crisis. The recoveries have reached more than $5 billion. The NCUA's recoveries in these suits offset the total costs to credit unions of the corporate stabilization program. As a result of the merging of the stabilization fund into the National Credit Union Share Insurance Fund, eligible credit unions received $735.7 million in distributions last month. NAFCU continues to fight for credit unions to realize the fullest distribution possible.

The NCUA still has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses.

NAFCU for years has worked to set the record straight on the differences between credit unions and banks. As not-for-profit, member-owned cooperatives, credit unions focus on member service rather than stockholder enrichment.

Recent surveys have shown Americans' trust in banks falling, as well as an unwillingness to give banks the benefit of the doubt in a crisis situation. In contrast, credit unions remain committed to serving members and have seen steady membership growth year over year.