Tuesday, March 13, 2012 10:46:00 AM
ALEXANDRIA, Va. – NCUA and HSBC reached a settlement regarding potential claims relating to the sale of residential mortgage-backed securities to five failed wholesale credit unions. HSBC has agreed to pay NCUA $5.25 million to reduce the losses associated with the five failures. The settlement with HSBC does not admit fault on their part. NCUA will use the net proceeds from this settlement to further reduce assessments being charged to credit unions to pay for the losses.
“This is NCUA’s third favorable settlement of actionable claims. We appreciate HSBC’s efforts to resolve potential claims so that we can avoid the expense and delay of litigation,” said NCUA Board Chairman Debbie Matz. “NCUA to date has received a total of $170.75 million in settlement proceeds. This settlement furthers our goal to minimize losses and thereby reduce the assessments that all credit unions will have to pay. NCUA will continue to fulfill our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected.”
Losses from wholesale credit union failures are paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions. Thus, recoveries such as this settlement reduce the amount of future assessments on credit unions.
Since 2009, NCUA has assessed credit unions $3.3 billion to pay for losses associated with the five corporate credit union failures. Given the current settlement proceeds, projections for remaining assessments range between $1.8 billion and $6.1 billion that must be paid by 2021.
To read NCUA’s press release click here.