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Credit Union Agency Wins Appellate Ruling on Big Bank Suits (1)

August 27, 2013

The National Credit Union Administration won an appeals court ruling letting it pursue claims against big banks for allegedly making misleading statements to market mortgage-backed securities.

The U.S. Court of Appeals in Denver today unanimously affirmed a lower-court ruling that the NCUA can rely on an “extender statute” giving it more time to file the lawsuits lenders said were filed too late.

That “serves the statute’s purpose by providing NCUA sufficient time to investigate and file all potential claims once it assumes control of a failed credit union,” the three-judge panel said.

The ruling resolves an appeal by RBS Securities Inc. that prompted a Kansas City, Kansas, trial court judge this year to halt most progress on several related cases until the issue was decided.

NCUA has filed similar lawsuits against units of Goldman Sachs Group Inc. (GS:US), JPMorgan Chase & Co. (JPM:US) and other banks. RBS Securities is a unit of Royal Bank of Scotland Group Plc. (RBS)

Ed Canaday, a spokesman for RBS Securities, declined to comment on the ruling.

“We’re pleased with the court’s decision,” NCUA Board Chairwoman Debbie Matz said today in a statement. “We will continue to pursue our claims against firms that sold faulty mortgage-backed securities to corporate credit unions.”

$335 Million Settlements

NCUA has a duty, as liquidating agent, to maximize recoveries in order to limit losses to the federally insured credit unions, she said.

The Alexandria, Virginia-based agency has reached $335 million in settlements with Bank of America Corp. (BAC:US), Citigroup Inc., Deutsche Bank AG and HSBC Plc., according to the press statement.

A Barclays Plc (BARC) unit in July won dismissal of one such suit in a ruling by U.S. District Judge John W. Lungstrum, who had issued the earlier order halting the cases except for the filing of papers on then-pending dismissal requests.

In the cases before the appellate panel, NCUA was pursuing claims arising from the collapse of two credit unions. U.S.Central Credit was the biggest federally-chartered corporate credit union in the U.S. before being placed in agency conservatorship in 2009 and liquidation in 2010, according to the ruling.

“Together the credit unions paid $1.74 billion for the RMBS involved in both cases, and losses from these failed investments contributed to the demise of both organizations,” the appeals court said.

The case is National Credit Union Administration Board v. Nomura Home Equity Loan Inc., 12-3295 and 12-3298, U.S. Court of Appeals for the 10th Circuit (Denver).

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at

To contact the editor responsible for this story: Michael Hytha at

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