Another major bank took a hit as the ""National Credit Union Administration"":http://www.ncua.gov/Pages/default.aspx (NCUA) filed a lawsuit against ""Credit Suisse Securities"":https://www.credit-suisse.com/us/en/ over the sale of faulty mortgage-backed securities (MBS).[IMAGE]
NCUA's ""complaint"":http://www.ncua.gov/News/Press/NW20121004SuisseComplaint.pdf, filed in a Kansas Federal District Court, alleges Credit Suisse misrepresented and omitted ""material facts"" about the origination and securitization of certain MBS in sales to U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, and Southwest Corporate Federal Credit Union.
According to the complaint, the credit unions only purchased the highest-rated MBS, all of which had been manipulated to enhance their credit ratings. When the mortgages in those securities started defaulting, the unions were left to deal with the losses.
The three unions, all now defunct, paid in excess of $715 million for the securities.[COLUMN_BREAK]
""At the time of purchase, the Credit Unions were not aware of the untrue statements or omissions of material facts in the Offering Documents of the RMBS. If the Credit Unions had known about the Originators' pervasive disregard of underwriting standards├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øcontrary to the representations in the Offering Documents├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øthe Credit Unions would not have purchased the certificates,"" NCUA said in its complaint.
As the liquidating agent for the three credit unions, NCUA says it is responsible for seeking recoveries in order to minimize losses to its own insurance fund and to the credit union industry.
""Credit Suisse is one of several firms that sold faulty securities to corporate credit unions, which led to their collapse,"" said Debbie Matz, NCUA's board chairman. ""These Wall Street firms ran a bait and switch operation, and the effects were felt not only in credit unions, but throughout the financial industry.
""NCUA and credit unions have successfully worked together to restore stability to the credit union system. Now we are holding responsible parties, like Credit Suisse, accountable for their actions,"" she continued.
Credit Suisse isn't the only one that's been targeted by NCUA├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øthe administration has also gone after JPMorgan Securities, Goldman Sachs, Wachovia, and Barclay's, to name a few.
However, NCUA's suit may be just the start of Credit Suisse's troubles. A report from ""Reuter's"":http://www.reuters.com/article/2012/10/04/us-creditsuisse-mortgages-idUSBRE8931IN20121004 published on the same day NCUA's suit was filed has an anonymous source suggesting that New York attorney general Eric T. Schneiderman has been investigating the bank, perhaps to ""continue his own pursuit"":https://themreport.com/articles/government-task-force-files-suit-against-jpmorgan-2012-10-02 of firms who dealt in faulty MBS prior to the financial collapse.