Goldman Sachs is among a handful of Wall Street banks negotiating with National Credit Union Administration (NCUA) on potential compensation for toxic MBS the investment banks sold to the five failed corporate credit unions.
NCUA declined to comment on the talks but Goldman said in its annual report it and NCUA have reached an agreement on the relevant statutes of limitation for the potential claims.
NCUA also is in talks with Bank of America over MBS Countrywide Mortgage and Merrill Lynch, subsequently acquired by the banking giant, sold to the failed corporates, sources told Credit Union Journal. A report by NCUA’s Office of the Inspector General found that MBS sold by Countrywide to WesCorp Federal Credit Union were the major reason for the failure of the one-time $34 billion corporate.
The claims are expected to be similar to those included in several suits brought by Federal Home Loan Banks against Goldman, Countrywide and several other Wall Street banks, claiming fraud in the sale of the MBS.
The potential claims are among several measures NCUA is undertaking to recoup losses from the five corporate failures: U.S. Central Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union, Constitution Corporate Federal Credit Union and WesCorp. Those failures are projected to cost the credit union industry as much as $20 billion.
NCUA has filed suit against almost 20 executives and directors of WesCorp and announced it plans to file directors and officers bond claims against U.S. Central figures.