On Tuesday, a number of government agencies, including the NCUA,were named in a $13 billion settlement with JP Morgan Chase. The NCUA will receive $1.4 billion that will resolve four lawsuits filed by the agency as liquidating agent against JP Morgan Chase, Bear Sterns, and Washington Mutual. The lawsuits were filed as the result of corporate credit unions purchasing faulty securities.
“Today's (Tuesday's) announcement by the Justice Department is extraordinary and an incredible win for credit unions,” NCUA Board Chairman Debbie Matz said. “In fact, we might have been considered audacious or even out of touch with reality had we suggested five years ago that such a settlement was possible. This resolution, combined with the $335 million already recovered, will enable NCUA to greatly reduce the assessments that all credit unions have to pay.”
"The League is pleased with the NCUA's settlement," said LSCU & Affiliates President/CEO Patrick La Pine. "The NCUA has been very diligent in pursuing accountability from the firms who sold the faulty securities. I would urge the agency to plow the settlement back into the Corporate Stabilization Fund, either directly or in the form of repayment of Treasury borrowings."
The NCUA is using net proceeds from the settlement to reduce the total Temporary Corporate Credit Union Stabilization Fund assessments charged to federally insured credit unions to pay for the losses caused by the failure of the five corporate credit unions. The NCUA has litigation pending against several other financial institutions, including Barclays Capital, Credit Suisse, Goldman Sachs, RBS Securities, UBS Securities, and Morgan Stanley, alleging the banks sold faulty mortgage-backed securities to five corporate credit unions.