WICHITA, Kan. A federal judge yesterday agreed to delay further proceedings in eight different NCUA suits against Wall Street banks over the failure of the corporate credit unions until the U.S. Court of Appeals for the Tenth Circuit has decided whether NCUA filed the civil claims too late to satisfy the statute of limitations.
“Based on the parties’ written submissions and the arguments heard by the Court at [Monday’s] status conference, the Court concludes that a stay is appropriate in each of these cases,” wrote U.S. Judge John Lungstrum. The Appeals court ruling, noted the judge, could result in dismissal of all claims with respect to certain securities, including all claims against certain Wall Street banks. Judge Lungstrum said he will issue further orders after the appeals court issue sits ruling. Oral arguments are scheduled for the case May 8.
The stakes in the cases are enormous because if the appeals court rules against NCUA it would bar the credit union agency from pursing most of the claims against the banks, as well as two separate cases in California.
The request for a stay was opposed by NCUA, which argued that delay could prejudice the outcome of its cases by changing the nature and availability of certain evidence and records.
The ruling affects almost $8 billion in claims brought by NCUA against JP Morgan Chase and two failed banks it acquired, Bear Stearns and Washington Mutual, Credit Suisse Securities, UBS Securities, Barclay’s Capital, as well as RBS Securities and Wachovia Capital, now a unit of Wells Fargo. The latter two banks are the subject of the appeals court review, as well.
The banks argue that the three-year statute of limitations on the sale of some of the mortgage-backed securities the banks sold to the failed corporates, some as early as 2005, expired by the time NCUA began filing the suits in 2011. NCUA claims the statute did not start running until it after it took over the failed corporates, U.S. Central FCU and WesCorp in 2009, and Members United, Southwest Corporate and Constitution Corporate in 2010.
The suits were filed in the federal court in Kansas, which has jurisdiction over U.S. Central, which was based in Lenexa, Kan.