The Wall Street Journal is reporting that the National Credit Union Administration (NCUA) has threatened to sue several investment banks unless they refund over $50 billion of mortgage-backed securities sold to the five failed corporate credit unions.
The $50 billion in bonds currently have a face value of $25 billion.
The NCUA alleges that several investment banks misrepresented the risks of the bonds to these corporate credit unions.
NCUA seized the five corporate credit unions in 2009 and 2010 after their investments in sub-prime and interest only mortgage-backed securities soured.
The five failed corporate credit unions are U.S. Central Corporate FCU in Lenexa, KS; Western Corporate FCU in San Dimas, CA; Constitution Corporate FCU in Wallingford, CT; Members United Corporate FCU in Warrenville, IL; and Southwest Corporate FCU in Plano, TX.
Read the article (subscription may be required).
An investment bank is a financial institution that assists corporations and governments in raising capital by underwriting and acting as the agent in the issuance of securities. These banks also aid in providing strategic advisory services for mergers, acquisition and other types of financial transactions. Thanks.
ReplyDelete