Upon further review, the lawsuit stands

by: Henry Meier

With apologies to those of you who have the temerity to consider football boring, yesterday afternoon the credit union industry was granted the legal equivalent of a referee reversing his call based on an instant replay review. Not just any ruling, instead of the game being over, NCUA can continue to fight to reclaim funds on behalf of credit unions.

Specifically, I am referring to a ruling by the Court of Appeals for the 10^th Circuit which revived a lawsuit NCUA brought against Barclays Capital, Inc. seeking more than half a billion dollars for the role it played in issuing mortgage-backed securities sold to the now defunct U.S. Central Federal Credit Union and Western Corporate Federal Credit Union. NCUA is essentially claiming that the bank violated security laws by failing to accurately disclose the quality of mortgages in mortgage-backed-securities purchased by these entities. As you all remember, these and other securities tumbled in value in less time than it took House Republicans to demonstrate that they still don’t know how to govern.

If successful, NCUA would use these funds to offset credit union premiums paid into the Temporary Credit Union Stabilization Fund. All this is a rather long winded way of saying that the success of this and other lawsuits could directly impact your credit union’s bottom line.

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