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Judge Dismisses NCUA Suit against US Bank and B of A
Thursday, May 21, 2015 6:30 AM

U.S. District Judge Katherine Forrest ruled Monday that the National Credit Union Administration lacked standing to sue U.S. Bank and Bank of America over 74 of the trusts that the agency moved into new, independent trusts (Bloomberg May 19).

Forrest dismissed three lawsuits, including one by the NCUA, brought against U.S. Bank National Association and Bank of America National Association, regarding their duties as trustees of residential mortgage-backed securities (RMBS).

NCUA filed the lawsuit in December alleging the two banks failed to fulfill their duties as trustees for 99 of the trusts.

Nothing in federal securities law “authorizes NCUA (or the [corporate credit union] for which it acts as liquidating agent) to sue on behalf of separate statutory trusts,” Forrest ruled, according to court documents.

According to court documents, plaintiffs will have an opportunity to replead.

Five corporate credit unions—U.S Central, WesCorp, Members United, Southwest and Constitution—purchased roughly $5.8 billion in RMBS issued from the trusts between 2004 and 2007. Those securities lost value, contributing to the failure of all five.