Federal Judge: Statute of Limitations Has Run Out in Mortgage-backed Securities Case (Misc News: December 29, 2011)
A federal judge’s preliminary ruling could mean the end of the NCUA’s attempts to recover billions in losses suffered by corporate credit unions in the mortgage-backed securities case.
U.S. District Court Judge George Wu said in his preliminary ruling that the NCUA suit against RBS fell outside of the statute of limitations for the case, CU Times reported.
Wu said that the statute of limitations specifies a 3-year limit from the time of purchase of the securities. The now defunct WesCorp purchased the securities starting in 2005. WesCorp lost more than $685 million on the RBS securities, which contributed to its failure in 2010. The NCUA’s suit was filed in 2011.
The NCUA has also filed similar suits against Goldman Sachs, JPMorganChase and Wachovia and has said it may file suits against other big banks. If Wu’s ruling stands as is, those suits could be in doubt as well.
An NCUA spokesperson said the federal oversight agency disagrees with the ruling and noted that it is not Wu’s final ruling. The spokesman noted that Wu has called for additional briefings as well as another hearing in January.
“We remain confident in our positions and intend to continue to aggressively pursue recovery in this litigation as well as from others responsible for losses to the credit union system,” the spokesperson said.
Wu said he would issue a final ruling in early 2012.