WICHITA – A federal judge Friday agreed to consolidate two suits NCUA has brought against Wall Street banks for their sale of faulty residential mortgage-backed securities that went bad and helped cause the failure of U.S. Central FCU and WesCorp FCU, the two biggest of five corporate credit union failures.
The U.S. District Court for the District of Kansas ruled the separate NCUA suits have enough in common, that is the two major defendants, RBS Securities and Wachovia Capital Markets (now Wells Fargo) question whether NCUA as liquidating agent for the failed corporate filed the suits before the expiration of a statute of limitations on relevant securities claims. “It is clear to this Court that these cases contain common questions of fact and law and that consolidation would serve the interest of judicial efficiency,” wrote U.S. Judge Julie Robinson in her Friday ruling agreeing to a motion by Wells Fargo.
Wachovia, which was subsequently acquired by Wells, sold $100 million of RMBS to U.S. Central and WesCorp as long ago as 2006, but NCUA did not file its civil suit until a year ago, after it had taken over the two corporate giants and began to liquidate them. The statute of limitations on federal securities claims is three years, but NCUA claims the clock did not start ticking until it took over the two corporate in March 2009.
NCUA has similar suits pending against JP Morgan Chase, Goldman Sachs and other Wall Street underwriters who sold RMBS to the failed corporates.
The consolidated cases were filed in federal court in Kansas, which has jurisdiction on claims related to the 2009 collapse of Lenexa, Kan.-based U.S. Central, the one-time $52 billion central bank for credit unions.
