Yesterday, I reported that National Credit Union Administration (NCUA) paid more than $1 billion in contingent legal fees to two law firms regarding lawsuits over the sale of toxic mortgage securities that contributed to the failure of five corporate credit unions during the financial crisis.
These contingent legal fees were approximately 23.2 percent of the total recoveries from the settlement of the lawsuits.
However, Reuters is reporting that legal fees paid by NCUA is more than double the amount paid by the Federal Housing Finance Agency (FHFA).
FHFA paid $406.7 million to law firms that pursued similar set of lawsuits over the sale of toxic mortgage securities. These legal fees were approximately 2 percent of the $18.7 billion FHFA had obtained through settlements and judgments.
Why didn't NCUA negotiate a better deal?
Congress should investigate NCUA's sweetheart deal with these two law firms.
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This has no shortage of issues from direct to disparate impact.
ReplyDeleteNCUA paid 23 points to 2 law firms while FHFA paid 2 points. And got less.
Did NCUA "shop" the deal the way they club on credit unions to shop a bond purchase?
Apparently not.
Did we previously read somewhere that one of the law firms has a partner who has been a life long BFF. Of Fenner?
Can we claw back on Fenner?
Aren't contingency lawsuits prohibited by an Executive Order because they typically lead to lower proceeds?
Is congress so inept and derelict of duty that they can't reign in this rogue agency?
Where is CUNA and nafcu in protecting us from such pitiful performance?
Where is mr transparency mark mcwatters on this issue?
Is he all good on it? If so, then he is all talk and no action.
Oh the shame of it all.
This is so bad that it hurts.
What will credit unions do about this?
Can't wait to inform my board.
What a travesty.
ReplyDeleteDid we not hear that NCUA claims they worked the least costly solution? Seems like we heard that a bunch of Times!
Title of this post does not need a"?".
ReplyDeleteAt least your banker buddies still read your comments Keith.
ReplyDeleteAccording to a NCUA spokesperson, it’s not an apples-to-apples comparison w/FHFA. FHFA paid those lawyers on an hourly basis. If NCUA had chosen to go the hourly rate route, credit unions would have had to shoulder huge fees at a time when they would have scarcely been able to handle them, so that was not really a viable choice.
ReplyDeleteAlso, the NCUA spokesperson said the percentage rate was at the low end of the rate law firms normally charge for handling contingency fee cases.
Thanks for sharing that but...so what?
DeleteIf we were playing that close to the line then our supervision of corporates should've been MUCH BETTER THAN IT WAS.
And we still broke the executive order and got hosed.