However, during the October 4 Virtual Town Hall Meeting, NCUA Chairman Debbie Matz stated that the $170 million in settlements was going to the Stabilization Fund, when the agency knew this was not true.
Below are excerpts from the transcript of the Town Hall Meeting dealing with the lawsuits and the out-of-court settlements.
Todd Harper: We have a question here about the lawsuits that NCUA has been bringing. What is the latest with the lawsuits against the big lenders who caused the big losses at the corporates? Is there talk of a settlement? And I think Mike McKenna, you’re probably in the best place to answer that.
Mike McKenna: Well, we’ve sued a number of different underwriters. We’ve sued Goldman Sachs, Bank of Scotland, JPMorgan, Wachovia, UBS, and Barclays. We’ve settled with 3 underwriters. We’ve settled with Deutsche Bank, Citi Group, and HSBC for approximately $170 million.
Todd Harper: We have a question here about the $170 million that NCUA has already received to date in settlements with Wall Street financial underwriters. How will this $170 million that NCUA has collected affect future Corporate Stabilization Fund assessments charged to credit unions?
Chairman Debbie Matz: That $170 million is returned to the Corporate Stabilization Fund and is used to reduce corporate assessments going forward.
While NCUA Chairman Matz is correct that the settlements will lower future assessments, the failure to acknowledge that less than $130 million of the $170 million in settlements was being applied to the Stabilization Fund balance is a glaring omission on the part of Chairman Matz. If this information had been disclosed, it could have raised additional uncomfortable questions for the agency.