Big bank agrees to $29 million payout over shoddy mortgage bonds

by Ryan Smith29 Mar 2016
A major bank has agreed to pay $29 million to a U.S. regulator to settle a lawsuit over mortgage-backed securities.

Credit Suisse agreed to the settlement with the National Credit Union Administration in order to settle claims of losses to credit unions from the purchase of more than $228.8 million in mortgage bonds in the years before the financial meltdown, according to a report from research firm Zacks.

While this suit, which involved the sale of mortgage-backed securities to the Members United and Southwest corporate credit unions, has been settled, there’s still another case pending in federal court related to the sale of shoddy mortgage bonds to the U.S. Central and Southwest corporate credit unions, Zacks reported.

“NCUA will continue to meet its statutory obligation to secure recoveries for credit unions and ensure customers remain protected,” said Debbie Matz, chair of the NCUA board. “We will continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis with the goals of minimizing net losses of the corporate crisis and providing a future rebate to credit unions.”

NCUA has so far recovered more than $2.5 billion in legal penalties related to securities cases, Zacks reported. That money has been used, in turn, to pay claims against five failed credit unions.

Credit Suisse is hardly the first bank sued by the agency. NCUA has sued numerous banks, including Bank of America, Barclays and Morgan Stanley, to recover losses on billions of dollars in mortgage-backed securities.

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