WICHITA, Kan. – The Securities Industry and Financial Markets Association told the federal appeals court yesterday it will be filing a brief on behalf of several Wall Street banks that say NCUA waited too long to file billions of dollars in civil claims over mortgage-backed securities the banks sold to five failed corporate credit unions, as the stakes in the huge legal battle grow more apparent.

The lobby group for the securities and bond industries asked the U.S. Court of Appeals for the Tenth Circuit for additional time to file an amicus brief supporting RBS Securities, Wells Fargo’s Wachovia Capital Markets, Nomura Home Equity Loan, Financial Asset Securities and NovaStar Mortgage Funding, who all claim the statute of limitations on relevant securities claims had expired before NCUA filed suit against them.

While NCUA’s claims surround some $10 billion in MBS, the case has much broader ramifications on similar claims brought by Fannie Mae, Freddie Mac and dozens of institutional investors who allege they were duped into buying faulty MBS created and sold by Wall Street that later failed.

NCUA has filed ten separate suits against Wall Street banks and more than a dozen subprime mortgage originators claiming MBS they packaged and sold to five corporate credit unions caused the collapse of the institutions, saddling NCUA and the nation’s 7,000 credit unions as much as $20 billion of losses.

The corporates credit unions, wholesale banks for regular credit unions, included U.S. Central FCU, a one-time $52 billion central bank for credit unions, WesCorp FCU, a one-time $34 billion institution, as well as Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU.

The Tenth Circuit appeals court has agreed to hear an appeal of a lower court ruling that a federal agency like NCUA or FDIC should be given special privileges in extending the nominal three-year statute of limitations, which NCUA argues should not have begun until after it took over the failed institutions, even though some of the MBS were sold to the corporates as long as seven years before the onset of the legal claims.

The Securities Industry group told the appeals court yesterday its interests in the case “stems from its members’ recognition of the importance of the fair and timely enforcement of the federal securities laws to deter and remedy wrongdoing, a key component of which is the consistent application of the statues of (limitations) that are a critical part of these laws.”

NCUA has also filed suits against Goldman Sachs, UBS Securities, Barclay’s Capital, Credit Suisse Securities and JP Morgan Chase, for securities not only sold by it to the failed corporates, but by Bear Stearns & Co. and Washington Mutual Bank, which JP Morgan, acquired in 2008. NCUA has also reached out-of-court settlements with Citibank, HSBC and Deutsche Bank Securities over MBS sold to the corporate failures.

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