Sunday, August 14, 2011

Goldman Sachs Added To Credit Union Regulator's Hit List Of MBS Peddlers That Unloaded Crappy Paper On Now-Defunct, Federally-Backed Institutions

From a press release from the National Credit Union Administration:

  • The National Credit Union Administration filed suit [Tuesday] in California against New York firm Goldman Sachs & Co. alleging violations of federal and state securities laws, as well as misrepresentations in the sale of securities to now-failed U.S. Central and Western Corporate federal credit unions.


  • This action seeks damages in excess of $491 million from Goldman Sachs, bringing the total sought in the four lawsuits filed to date to nearly $2 billion. NCUA’s new suit against Goldman Sachs claims the sellers and underwriters of the questionable securities made numerous material misrepresentations in the offering documents. These misrepresentations caused the corporate credit unions to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial.

  • The mortgage-backed securities experienced dramatic, unprecedented declines in value, effectively rendering five corporates insolvent. The combined suits are the culmination of lengthy investigations into the circumstances surrounding the purchases of these securities.

  • This law suit follows three similar legal proceedings, two filed in the Federal District Court of Kansas June 20 against J.P. Morgan Securities, LLC, and RBS Securities, and one in the Federal District Court in Central California also against RBS July 18. Anticipating a total of five to 10 actions, additional lawsuits may follow in order to recover losses from the purchase of securities that caused the failures of five, large wholesale credit unions.(1)

For the press release, see NCUA Files Fourth Suit in String Against Securities Firms to Recover Billions (Recoveries Will Benefit All Federally Insured Credit Unions).

For the lawsuit, see National Credit Union Administration v. Goldman, Sachs & Co. et al.:

(1) Lawsuits by federal regulators against MBS-peddling banksters accusing them of knowingly unloading crappy mortgage-backed investments on federal agencies (e.g. credit unions, Fannie Mae, Freddie Mac) appear to be picking up steam. See:

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