May 3 Credit Suisse Group AG paid $400
million to settle claims that the Swiss bank sold toxic mortgage
securities that contributed to the demise of three federal
credit unions, a U.S. regulator said on Wednesday.
The National Credit Union Administration said the settlement
resolves the 19th of 20 lawsuits it filed in the last six years
against banks over their underwriting or sale of securities to
five credit unions that failed in 2009 and 2010.
Including a $445 million accord with UBS Group AG
announced on Monday, the NCUA said it has recovered roughly $5.1
billion from the banks from these lawsuits.
It said proceeds will be used to pay claims against the
Constitution Corporate, Members United Corporate, Southwest
Corporate, U.S. Central and Western Corporate credit unions.
Credit Suisse's payment resolves claims that the bank misled
Southwest Corporate, U.S. Central and Western Corporate about
the risks of $715 million of residential mortgage-backed
securities bought from 2005 to 2007, court records show.
The payment is separate from a $50.3 million settlement that
the bank reached in April 2016 to resolve claims in a separate
NCUA lawsuit, the regulator said.
Credit Suisse did not admit wrongdoing.
A spokeswoman, Nicole Sharp, said the bank was pleased that
"another legacy matter has been resolved," and had set aside
enough money for the settlement in the first quarter.
The NCUA voluntarily dismissed its case against Credit
Suisse on Tuesday in connection with the settlement, court
It said the 20th case over mortgage securities relates to
the now-bankrupt NovaStar Financial Corp.
The case is National Credit Union Administration Board v.
Credit Suisse Securities (USA) LLC et al, U.S. District Court,
District of Kansas, No. 12-02648.
(Reporting by Jonathan Stempel in New York; Editing by Tom