The National Credit Union Administration (NCUA) received a judicial setback when a federal judge in Los Angeles tentatively dismissed several claims in a lawsuit filed by the regulator against Goldman Sachs.
CUNA News reports that U.S. District Judge George Wu dismissed with prejudice NCUA's claims concerning seven of the eight residential mortgage-backed securities (RMBS) certificates at issue in the lawsuit, which charged that the Goldman Sachs' RMBS issues played a role in the collapse of several credit unions.
‘Although Goldman would like the court to view many of these allegations not as systematic disregard of underwriting guidelines, but instead as blind adherence to underwriting guidelines involving loan products that, by their very nature, were risky products, that is not a conclusion that the court is prepared to reach on the basis of the NCUA's pleadings,’ Wu wrote.
As for the eighth certificate, Wu ruled that the NCUA ‘had at least a 'bona fide dispute' with respect to the standing of the representative plaintiffs in earlier cases covering the certificate.’ However, he warned that the NCUA needed to provide ‘something more’ than post-origination performance statistics to prove its case of problematic underwriting by Goldman Sachs.
