The National Credit Union Administration (NCUA) filed a case against Morgan Stanley and eight other lenders for the sale of faulty securities. The mortgage-backed securities worth close to USD 2.4 billion were sold by the banks to Southwest and Members United corporate credit unions.
Aside from Morgan Stanley and Morgan Stanley Capital I Inc, the other respondents in the case were Barclays, JP Morgan Chase & Co's Bear Stearns unit, Credit Suisse Group, Royal Bank of Scotland Group, Goldman Sachs Group Inc, Wachovia Corp, a Wells Fargo & Co unit and Ally Securities (formerly called Residential Funding Securities).
According to the complaint against Morgan Stanley, the two credit unions paid over USD 416 million for the said securities. For the other defendants, the credit unions paid more than USD 1.9 billion for the faulty securities.
NCUA Board Chairman Debbie Matz said, "We continue to pursue accountability and recovery in the wake of billions of dollars in sales of faulty securities that led to the collapse of several corporate credit unions and handed the industry the costly bill of paying for the losses."
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