In an effort to resolve a US regulator's claim about selling toxic mortgaged-backed securities to credit unions, UBS AG has agreed to pay $33 million.
The settlement which was disclosed in a filing in a federal court in Manhattan, resolves one of the many lawsuits by the National Credit Union Administration against banking companies over their sale of mortgage-backed securities before the 2008 global meltdown.
Reuters reported that the agreement boosts to almost $2.46 billion the amount the NCUA has recovered from the banks through lawsuits it began filing back in 2011. Meanwhile, UBS declined to comment on the issue.
Described as an 'offer of judgment' in the case, the court filing stated that it would not have any impact on a separate, but similar case by the NCUA against UBS.
On Tuesday, top executives of the NCUA said they support an alternative option that would permit credit unions to merge some procedures. According to The Credit Union Journal, the general counsel issued a legal statement that allows credit unions under the Federal Court Union Act to merge by forming the Network Credit Union.
The lawsuit filed was subject to the agreement that centers on mortgage-backed securities underwritten and sold by UBS that Members United Corporate Federal Credit and Southwest Corporate Federal Credit Union bought for an estimated $432.4 million from 2006 to 20007.
According to Fox Business, NCUA filed the lawsuit in 2014 to represent the failed credit unions. NCUA claims that the offering of securities and the documents involved contained fraudulent statements that the loans were originated in accordance with underwriting guidelines.
The lawsuit named "National Credit Union Administration Board v. UBS Securities LLC, U.S. District Court, Southern District of New York, No. 13-6731" alleges that the originators of the loan had systematically abandoned the stated underwriting guidelines. NCUA added that the fraudulent statements made the securities riskier than represented and contributed to the credit unions suffering significant losses.
