The National Credit Union Administration (NCUA) reveals that UBS AG has agreed to pay $69.8 million in settling a lawsuit. The lawsuit accuses the Swiss financial services company for selling toxic mortgage backed securities to corporate credit unions that eventually failed.
Though the claim has been valued at $33 million during its first disclosure in February, but the recently agreed sum includes pre-judgment interest. However, the sum excludes Attorneys' fees, which are to be determined later. UBS has agreed to make the payment on April 22, reports Reuters, citing a letter filed in Manhattan federal court by lawyers for NCUA on Friday, as the source.
NCUA has filed lawsuit against Royal Bank of Scotland (RBS), Morgan Stanley and eight other institutions over the sale of nearly $2.4 billion in mortgage-backed securities in 2013. U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United and Southwest, all have incurred losses during the financial crisis centering toxic Residential Mortgage Backed Securities (RMBS), according to a report published in Housingwire.
Barclays and Wachovia after becoming parts of Wells Fargo, has agreed to pay a total of $378 million to NCUA in October 2015. The payment has been made to settle two separate lawsuits centering RMBS losses.
RBS has settled the litigation paying $129.6 million in September 2015, while Morgan Stanley settled a similar claim for $225 million last December 2015. In addition to those, Credit Suisse has agreed last month to pay NCUA $29 million in settling RMBS related claim. Now, UBS has also enrolled its name in the list of settlers. The comprehensive strategy for resolving corporate crisis adopted by NCUA includes an aggressive litigation effort to secure recoveries from responsible Wall Street firms. NCUA has been minimizing net losses incurred by the credit unions through holding responsible parties accountable. The administration is expected to provide a future rebate to credit unions for their Temporary Corporate Credit Union Stabilization Fund assessments, reports Credit Union Times, quoting Debbie Matz, NCUA Board Chairman. Proceeds realized from these settlements will be used to repay the Stabilization Fund's outstanding borrowings from the U.S. Treasury. The amount payable by the surviving credit unions to recoup the losses of the corporate credit union system will also be decreased using the proceeds. However, UBS will still have to settle a lawsuit in federal court of Kansas for selling faulty RMBS to U.S. Central and WesCorp corporate credit unions. A spokesperson for UBS has declined to comment over the settlement.
