UBS will pay $69.8 million to the National Credit Union Administration, according to an NCUA release. The amount reflects damages and interest arising from losses to Members United and Southwest, two corporate credit unions that failed during the financial meltdown.
“Part of NCUA’s comprehensive strategy for resolving the corporate crisis has been an aggressive litigation effort to secure recoveries from the Wall Street firms whose sale of faulty securities precipitated the crisis,” said NCUA board chair Debbie Matz. “Because of our ongoing efforts to hold responsible parties accountable, we are minimizing net losses to credit unions an should ultimately be able to provide a future rebate to credit unions for their Temporary Corporate Credit Union Stabilization Fund assessments.”
The NCUA board initiated the lawsuit against UBS as liquidating agent for Members United and Southwest. In February, the NCUA accepted UBS’s offer of $33 million in damages. Added to that amount was prejudgment interest determined by the court – which brought UBS’s total penalty to $69.8 million, according to the NCUA. The bank will also be liable for attorney’s fees and expenses.
And UBS’s troubles aren’t over. The NCUA still has litigation pending against the bank in Kansas for the sale of shoddy mortgage bonds to two other credit unions.
So far, the NCUA has obtained more than $3.1 billion in recoveries through litigation over the sale of faulty mortgage-backed securities to corporate credit unions. The proceeds from the settlements are used to repay the Temporary Corporate Credit Union Stabilization Fund’s loans from the U.S. Treasury, as well as to decrease the amount that surviving credit unions need to pay to recoup the losses the corporate credit union system endured during the meltdown.
A big bank will have to pony up nearly $70 million to settle claims against it arising from its sale of residential mortgage-backed securities.