Articles Tagged with Credit unions

Morgan Stanley (MS) will pay $225 million to resolve claims brought by the National Credit Union Administration (NCUA) for Western Corporate Federal Credit Union, U.S. Central Federal Credit Union, Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union. The credit unions contend that the firm left out material facts and made false statements when selling mortgage backed securities (MBS). The credit unions argued that their purchase of the faulty MBS led to their demise.

Structured products, such as MBS, that are tied to residential mortgage-backed securities (RMBS) played a major part in credit unions failing after the 2008 financial crisis. U.S. Central, which was the largest credit union to fail in 2009, sustained billions of dollars of losses after purchasing faulty MBSs.

As of 9/25/15, the unpaid balance of the securities was approximately $194 million, with losses incurred by the certificates at $31 million. As part of the MBS settlement, pending lawsuits against the firm will be dropped in New York and Kansas. Proceeds from the settlement will go toward claims made against the corporate credit unions.

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