NCUA-BofA settlement puts recoveries at $335 million

April 02, 2013

NCUA-BofA settlement puts recoveries at $335 million

April 3, 2013 – NCUA on Tuesday announced it entered into a $165 million settlement with Bank of America and subsidiaries for losses related to purchases of residential mortgage-backed securities by failed corporate credit unions, a development that puts total recoveries to date at $335 million.

"We are heartened by this latest turn in NCUA's effort to recover losses to the corporate system – costs that are being borne by all insured credit unions," said Carrie Hunt, NAFCU's general counsel and vice president of regulatory affairs. "NAFCU fully expects that the agency will reduce the assessments on credit unions even further, this year or in future years."

NAFCU asked about attorneys fees, and NCUA said the gross proceeds include attorney fees.

Until now, NCUA has estimated this year's stabilization assessment on credit unions would equal between 8-11 basis points of insured shares. Assessments pay for the costs of the Temporary Corporate Credit Union Stabilization Fund.

"NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions," said agency Chairman Debbie Matz. "These settlements and our ongoing lawsuits further NCUA's goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions."

The announced settlement with Bank of America follows three similar agreements with Citigroup, Deutsche Bank Securities and HSBC totaling $170.75 million. Bank of America did not admit fault as part of the settlement.

"We have a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected," added Matz. "We will continue to expend every possible effort to fulfill that important responsibility."

NCUA has filed ten lawsuits against several other firms, including Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear, Stearns, alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.

NCUA announcement

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