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The National Credit Union Administration (NCUA) has settled two longstanding lawsuits with major lenders concerning problematic residential mortgage-backed securities (RMBS).
The NCUA announced an agreement to end a four-year-old lawsuit against Wachovia, which agreed to pay the regulator $53 million to resolve claims arising from losses related to purchases of the securities by five now-defunct corporate credit unions. The NCUA also resolved a three-year-old lawsuit against Barclay’s Capital, which the company agreeing to pay $325 million to resolve similar RMBS-related claims. The funds collected in both settlements will be used to reduce Temporary Corporate Credit Union Stabilization Fund assessments charged to federally insured credit unions that covered the losses caused by the failure of the five corporate credit unions.
“In order to help minimize losses and future costs to the credit union system, NCUA is committed to pursuing recoveries against financial firms we maintain contributed to the corporate crisis,” NCUA Board Chairwoman Debbie Matz said. “The agency has a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected, and we take that responsibility very seriously.”