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Sept. 24, 2013 – NAFCU President and CEO Dan Berger welcomed NCUA's decision to pursue recoveries from banks and other firms in the U.S. and around the world Monday for their part in rate manipulation and the sale of mortgage-backed securities that helped bring down five corporate credit unions.

On Monday, the agency filed a suit against 13 international banks over alleged manipulation of rates through the London Interbank Offered Rate system that led to losses of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution. It also filed an additional nine lawsuits against Morgan Stanley & Co. Inc. and eight others over the sale of nearly $2.4 billion in mortgage-backed securities to Southwest and Members United.

In the suit over LIBOR rate manipulation, filed in federal district court in Kansas, NCUA alleges that the 13 named institutions engaged in the manipulation of LIBOR, the benchmark for setting interest rates around the globe. In the MBS suits, filed in New York, the agency said originators systematically abandoned the stated underwriting guidelines in the offering documents, with the result that the securities were significantly riskier than represented.

NAFCU has encouraged NCUA to pursue all means available to mitigate the impact of corporate stabilization on federally insured credit unions. "We urge the agency to leave no stone unturned in its effort to help reduce the costs insured credit unions will ultimately bear," Berger said.

NCUA Board Chairman Debbie Matz, in Monday's announcement, said her agency has "a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions."

NCUA claims the defendants in the LIBOR manipulation suit individually and collectively gave false interest-rate information through the LIBOR rate-setting process to benefit their own interests at costs to investors. The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying.