The National Credit Union Administration (NCUA) announced this afternoon it will receive $165 million from Citigroup and Deutsche Bank Securities to settle claims of wrongdoing in the sale of MBS to failed corporate credit unions.
Under the negotiated settlements, Citigroup will pay $20.5 million and Deutsche Bank $145 million and the two Wall Street banks will not admit fault on their part.
NCUA will use the proceeds from the two settlements to pay for losses accrued by the five failed corporate credit unions, U.S. Central Federal Credit Union, WesCorp Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union and Constitution Corporate Federal Credit Union.
NCUA still has suits related to the corporates’ losses pending against JPMorgan Chase, Royal Bank of Scotland Securities and Goldman Sachs.
“Citigroup is among the first major underwriters to come forward with a settlement proposal, and we appreciate their efforts to resolve potential claims so that we can avoid the expense and delay of litigation,” said NCUA Chairman Debbie Matz. “NCUA to date has received a total of $165.5 million in settlement proceeds. These settlements further our goal to minimize losses and thereby reduce the assessments that all credit unions will have to pay. NCUA will continue to fulfill our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected.”
Since 2009, NCUA has assessed credit unions $3.3 billion to pay for losses associated with the five corporate credit union failures.