Royal Bank of Scotland has agreed to settle another lawsuit over its role in saddling corporate credit unions with faulty mortgage securities.
U.S. Central Federal Credit Union and Western Corporate Federal Credit Union were two corporate credit unions that collapsed in 2009.
Among the factors that contributed to their
failures were investments in toxic mortgage-backed securities – including MBS marketed by RBS.
The bank was sued in 2011 by the National Credit Union Administration as liquidating agent for the pair of failed financial institutions.
On Monday, the regulator announced that a settlement was reached in both lawsuits.
The agreement will cost RBS $1.1 billion.
As part of the settlement, the
NCUA will dismiss its pending suits against RBS — which admits no fault.
The latest agreement follows a 2015 settlement for $130 million between the NCUA and RBS that resolved claims made in a lawsuit filed on behalf of failed Southwest Corporate Federal Credit Union.
In all, the NCUA says the latest RBS settlement brings to
$4.3 billion the recoveries it has collected from various financial institutions.
Similar litigation is still pending against other defendants, including Credit Suisse and UBS Securities.
National Association of Federal Credit Unions President and Chief Executive Officer Dan Berger said in a written statement, “NAFCU will continue to urge the agency to pursue its diligent legal recovery efforts and to be fully transparent in how and when the funds recovered will be refunded to credit unions.”
