BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
LOS ANGELES (Reuters)—The National Credit Union Administration regulator sued Goldman Sachs Group Inc., accusing the bank of violating federal and state law by selling risky mortgage-backed securities to two credit unions that later failed.
The NCUA is seeking more than $491 million of damages related to the sale of about $1.18 billion of securities, according to the agency and its lawsuit filed Tuesday in the U.S. district court in Los Angeles.
It is the fourth lawsuit filed since mid-June by the NCUA, following two against Royal Bank of Scotland Group P.L.C. and one against JPMorgan Chase & Co. The four lawsuits seek to recover nearly $2 billion.
The NCUA will "do everything reasonable in our power to seek maximum recoveries," Chairman Debbie Matz said in a statement. "Those who caused the problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions."
Goldman spokesman Stephen Cohen declined to comment.
In the Goldman case, the NCUA accused the bank of making "numerous material misrepresentations" to the U.S. Central and Western Corporate federal credit unions.
It said these caused the credit unions to believe that their "substantial" risk of loss from investing in residential mortgage-backed securities (RMBS) was in fact only minimal.
"The originators had systematically abandoned the stated underwriting guidelines," the complaint said. "As a result, the RMBS were destined from inception to perform poorly."
The NCUA said it expects to file five to 10 lawsuits to recover investment losses that led to the failure of five large wholesale credit unions: U.S. Central, Western Corporate, Constitution Corporate, Members United Corporate and Southwest Corporate.
Tuesday's lawsuit is the latest of many against Goldman over its alleged responsibility for investment losses tied to the recent credit and financial crises. These included a U.S. Securities and Exchange Commission fraud lawsuit that resulted in a $550 million settlement in July 2010.
In an SEC filing earlier Tuesday, Goldman lowered its estimate for future "reasonably possible" legal costs to $2 billion from its $2.7 billion estimate three months earlier. It said it expects such costs to remain high for the foreseeable future.
The case is National Credit Union Administration Board vs. Goldman Sachs & Co et al., U.S. District Court, Central District of California, No. 11-06521.