The National Credit Union Administration announced on Tuesday it had entered into a $165 million settlement with Bank of America over losses related to the purchase of residential mortgage-backed securities by failed credit unions.
“We are heartened by this latest turn in NCUA’s effort to recover losses to the corporate system – costs that are being borne by all insured credit unions,” Carrie Hunt, the vice president of regulatory affairs and general counsel at the National Association of Federal Credit Unions, said. “NAFCU fully expects that the agency will reduce the assessments on credit unions even further, this year or in future years.”
The settlement puts total recoveries to date at $335 million. It follows three similar settlements with Citigroup, Deutsche Bank Securities and HSBC that totaled $170.75 million.
“NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions,” NCUA Chairman Debbie Matz said. “These settlements and our ongoing lawsuits further NCUA’s goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions.”
The NCUA has alleged that other firms, including Barclays, Credit Suisse, Goldman Sachs, JPMorgan, RBS, UBS, Wachovia, Washington Mutual and Bear Stearns, violated federal and state securities laws when they sold mortgage-backed securities to five corporate credit unions.
The NCUA uses the net proceeds of the recoveries to reduce assessments charged by the Temporary Corporate Credit Union Stabilization Fund to federally insured credit unions to pay for losses caused by the five institutions’ failures.