Credit Suisse to face narrowed credit union regulator lawsuit

Wed Apr 10, 2013 12:38pm EDT
 
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By Jonathan Stempel and Aruna Viswanatha

(Reuters) - A federal judge has narrowed a credit union regulator's lawsuit against Credit Suisse Group AG CSGN.VX over the sale of $715.5 million of mortgage-backed securities to failed corporate credit unions.

Monday's decision by U.S. District Judge John Lungstrum in Kansas City, Kansas, nonetheless allows the National Credit Union Administration to pursue more than half its case against the Swiss bank.

It suggests that the regulator may be able to recover considerably more than the $335.8 million it has already obtained in settlements with four major banks.

The NCUA is pursuing 10 lawsuits on behalf of five credit unions it seized in 2009 and 2010 over losses they suffered on $14.1 billion of mortgage-backed securities amid a crumbling housing market.

Half of the securities were sold by JPMorgan Chase & Co (JPM.N: Quote), or Bear Stearns Cos or Washington Mutual Inc, both of which JPMorgan bought in 2008.

Wholesale credit unions suffered more pain than retail counterparts because they had more leeway on how to invest.

PLAUSIBLE CLAIMS

The Credit Suisse case relates to the sale between 2005 and 2007 of 20 residential mortgage-backed securities to three credit unions for which the NCUA board is now a conservator.   Continued...

 
The logo of Swiss bank Credit Suisse is seen on a building at Paradeplatz square in Zurich, February 13, 2013. REUTERS/Michael Buholzer