ALEXANDRIA, Va., and LOS ANGELES (7/16/13)--The National Credit Union Administration Board is reviewing its options and will pursue its claims vigorously. That is what the agency said after a federal judge in Los Angeles Friday ruled NCUA waited too long before filing some of its claims against Goldman Sachs over $491 million in losses from residential mortgage-backed securities (RMBS) sold to U.S. Central FCU and Western Corporate FCU, which no longer exist.
U.S. District Court Judge George Wu also said he would grant NCUA's request for an interlocutory appeal to the Ninth Circuit Court of Appeals on the time-barred issue. The decision affects the federal claims in the case, but not the state-based claims, which will still move forward, said NCUA.
"NCUA is reviewing the judges' holdings in the Goldman Sachs, Barclays and Credit Suisse suits and will determine the appropriate course of action based on that review," said John Fairbanks, public affairs specialist with NCUA's Office of Public and Congressional Affairs.
"NCUA has substantial claims against these and other companies who sold faulty securities to the corporate credit unions, and the agency will vigorously pursue those claims," Fairbanks told News Now.
In Friday's decision, Wu said, "The court grants the motion for interlocutory appeal on the question of whether the Extender Statute applies to extend the statute of repose...because this issue is a controlling question of law, has generated a substantial degree of disagreement, and its resolution can materially advance this litigation."
It was the second decision in a week that dismissed some of NCUA's claims against brokerage firms that sold or underwrote RMBS that caused the collapse of several corporates, including U.S. Central and WesCorp.
A U.S. District Court in Kansas earlier last week dismissed the agency's claims against Barclays Capital, saying it was time-barred and that NCUA had not filed the case in time. The Barclays suit was dismissed in total, but that is subject to appeal, if NCUA decides to pursue an appeal.
At the same time, the Kansas judge also reaffirmed an earlier decision in which he dismissed 12 of NCUA's 20 claims against Credit Suisse. (See related story in News Now, Court Dismisses NCUA Lawsuit Over Corporate CU Losses Vs. Barclays).
At the time of the Barclays and Credit Suisse decisions, NCUA issued a statement noting, "We respectfully disagree with the rulings, and we are reviewing them."
In the Goldman Sachs suit, the agency noted that U.S. Central and WesCorp purchased 21 RMBS from Goldman Sachs, which also acted as the underwriter. NCUA alleged losses of more than $491 million in the case.
In each of the lawsuits, NCUA alleged that the offering documents for the securities sold to the corporates "systematically abandoned" underwriting standards and misled the corporates into making the investments. U.S. Central and WesCorp were liquidated in 2009-2010 as a result of their losses.
The Tenth Circuit Court of Appeals in Kansas also is reviewing the time-barred issues in a separate suit NCUA filed against RBS Securities.