Credit Suisse will pay more than $29 million resolving claims by the National Credit Union Administration (NCUA) that the bank had sold toxic mortgage-backed securities to credit unions, which later failed.
A lawsuit brought by NCUA alleged that mortgage-backed securities underwritten and sold by UBS to Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union for more than $228.8 million from 2006 to 2007 failed the credit unions. According to the NCUA, these securities’ offering documents contained untrue statements that the loans were originated in accordance with underwriting guidelines, when, in reality, the loans’ originators had "systematically abandoned the stated underwriting guidelines" described in the offering documents.
The deal was disclosed in a filing in federal court in Manhattan and resolves one of the several lawsuits by the NCUA against banks over their sale of mortgage-backed securities before the 2008 financial crisis.
Including this case, the NCUA has recovered more than $2.5 billion from banks through similar lawsuits. The regulator began filing these suits in 2011.
According to a statement by NCUA Board Chairwoman Debbie Matz, the regulator will “continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis.”
According to the court filing, the judgment will have no effect on a separate but similar lawsuit by the regulator against Credit Suisse which is pending in Kansas.
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