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NCUA seeks to intervene in WesCorp lawsuit
ALEXANDRIA, Va. (12/31/09)--The National Credit Union Administration (NCUA), which serves as conservator of Western Corporate FCU (WesCorp), announced Wednesday it has filed papers in superior court in Los Angeles to intervene as plaintiff in a lawsuit against several current and former employees and officials of WesCorp. The civil action has been brought by seven natural person credit unions that are members of WesCorp that alleges negligence and breach of fiduciary duties in connection with WesCorp’s substantial investments in residential mortgage-backed securities and collateralized debt obligations. The NCUA said in its announcement that it is the proper plaintiff in the case and that the court should allow the agency to take the place of the current plaintiffs. In that capacity, the NCUA could determine whether and how to proceed with any action against WesCorp’s former board members and employees, the release said. The NCUA noted that WesCorp has been operating under federal control since being placed into conservatorship in March and, as conservator, the NCUA operates WesCorp through a management team. Therefore, the agency is “successor to all the rights titles, powers and privileges of the credit union and any of its members, accountholders, officers or directors.” NCUA concluded it had an obligation to intervene on behalf of all members of WesCorp. NCUA General Counsel Bob Fenner stated that "as conservator, NCUA has an obligation to protect the interests of all the members of WesCorp. NCUA has been actively investigating whether legal action is appropriate against many different parties, including former WesCorp officials, to redress the losses the institution has suffered. That investigation is continuing. "Federal law provides that NCUA as conservator is the appropriate party to represent the interests of all members in connection with any recovery attempts. While we did not choose to initiate this litigation, we believe NCUA has an obligation to intervene because claims of this nature belong to all of WesCorp’s members, not just the first plaintiffs to arrive at the courthouse.”


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