DEMOCRAT U.S. REP. FRANK
ANNOUNCES INTENT TO RETIRE
BOSTON-Credit unions lost another good ally last week when Barney Frank, the glib, fast-talking Democrat and long-time credit union supporter who lent his name to the landmark Dodd-Frank Financial Reform Bill announced his retirement from Congress.
Frank, 71, who was chairman of the House Financial Services Committee when he helped craft the bill in response to the financial crisis of 2008-2010, was always a good-but not great-credit union ally, in that he always said nice things about credit unions and usually voted for their legislation, but he never stepped out in front of an issue like some of the staunch credit union supporters.
In fact, Frank's relationship became strained two years ago when the main credit union lobby groups, CUNA and NAFCU opposed final passage of the bill that would become his lasting legacy because of the provision that would cap debit card fees.
The split was a reflection of growing departure between the leading liberal and the credit union lobby, which opposed him on efforts to limit credit card fees, rein in overdraft fees and allow mortgage holders to cramdown troubled home loans.
Still, some credit union lobbyists pointed to some of Frank's stances on behalf of credit unions, like his support for creation of the corporate credit union bailout fund and a delay in the debit card fees, even if it was too little too late.
Frank has served 16 terms in the House and is known as one of the most liberal members of Congress and one of its few openly gay members.
He said he won't run for a 17th term because of a proposed congressional redistricting in Massachusetts-where every one of the state's ten members of Congress are Democrats-because at his age he doesn't want to start campaigning in a new district.
NCUA SUES WACHOVIA OVER CORPORATE MBS SALES
WICHITA, Kan.-NCUA last week filed another suit against a big investment firm over the sale of mortgage-backed securities to failed corporate credit unions, this one naming defunct Wachovia Bank, now owned by Wells Fargo, as defendants.
The suit alleges violations of federal and state securities laws and misrepresentations in the sale of securities to now-failed U.S. Central FCU and WesCorp FCU.
The latest action was filed in U.S. District Court in Kansas, which has jurisdiction over Lenexa, Kan.-based U.S. Central.
Both U.S. Central and WesCorp were taken over by NCUA in March 2009, then liquidated in 2010, with the losses for the two corporate giants projected to reach as much as $12 billion.
Wachovia Capital Markets, the main defendant in the case, is now part of Wells Fargo, which bought the banking giant after it failed in 2009. Wachovia sold about $200 million of MBS to the two corporates, according to the suit.
The suit is the fifth brought by NCUA against big firms for the sale of faulty MBS to the failed corporate, with previous actions naming JP Morgan Chase, Goldman Sachs and two naming RBS Securities.
NCUA recently agreed to out-of-court settlements with Citicorp and Deutsche Bank Securities over their sale of MBS to the failed corporates. The separate agreements called for the two banks to pay NCUA $165 million.
"NCUA continues to do everything within our authority to seek maximum recoveries and ensure that those who caused the problems in wholesale credit unions pay for the losses incurred by retail credit unions," said NCUA Board Chairman Debbie Matz. "By filing these suits, we intend to hold responsible parties accountable for their actions."
NCUA's complaint alleges that there were numerous material misrepresentations made by the sellers, issuers and underwriters in the offering documents of securities sold to the failed corporate credit unions.
These misrepresentations caused the corporate credit unions that bought the securities to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial.
Any recoveries from these legal actions would reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund or the National Credit Union Share Insurance Fund.
Expenditures from these funds must be repaid through assessments against all federally insured credit unions.
Thus, any recoveries would help to reduce the amount of future assessments on credit unions. Credit unions have been paid $3.3 billion in corporate assessments over the past three years to pay for the resolution of the corporate failures.
