Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
NCUA replies to tentative rulings in Goldman Sachs case
LOS ANGELES (4/4/12)--The National Credit Union Administration (NCUA), in its lawsuit against Goldman Sachs & Co. over residential mortgage backed securities (RMBS) sold to Western Corporate FCU and U.S. Central FCU before their collapse, has filed supplemental memos and responses related to tolling time issues brought up in a tentative ruling by a federal judge in Los Angeles on March 15.

The March 15 tentative ruling is in addition to other tentative rulings made by U.S. District Judge George H. Wu in the U.S. District Court of the Central District of California, Western Division, in several cases involving NCUA seeking to recoup losses incurred by the corporates from investment banks.

The suit alleges that Goldman Sachs, GS Mortgage Securities, and Residential Accredit Loans violated securities law in connection with underwriting and issuing the RMBS sold to WesCorp FCU and U.S. Central. NCUA is suing as the liquidating agent for WesCorp and U.S. Central.

The latest flurry of filings relate to whether an "extender statute" and another court case, American Pipe Construction Co. v. Utah, apply to the statute of limitations and statute of repose arguments about whether NCUA had missed deadlines for filing the lawsuit.

NCUA had entered an agreement with Goldman Sachs to extend the time allowed for filing the lawsuit. NCUA says the limitations deadlines for filing the suit had not passed; Goldman Sachs says they had, despite the agreement between the parties.  Goldman also alleged NCUA didn't have standing to sue, since it was not one of the corporates that had bought the RMBs in question.  

In its response to tolling issues raised in an earlier filing, NCUA said Wu's March 15th tentative ruling "correctly concludes that this court should follow the strong majority of courts holding that American Pipe tolling applies whether or not the named plaintiff in a class action had standing to pursue direct claims for the injuries suffered by class members…," said NCUA's response.

In his March 15 tentative ruling, Wu said that "assuming the Court reaches the conclusion that the extender statute and American Pipe apply to the claims raised herein, the court would deny any attempt to dismiss [NCUA's] claims on statute of limitations grounds. " However, he added that "if any federal claims barred by the applicable statute of repose do not enjoy American Pipe tolling, those claims would be dismissed without leave to amend.  Assuming the court concludes American Pipe applies, the court would still order [NCUA] to amend its American Pipe-related allegations."  The court also said it would dismiss claims relying on origination activity of Homecomings Financial Network Inc., which failed to tie allegations to particular loans, but gave NCUA leave to amend its arguments there.

NCUA's reply memorandum said Goldman could have declined to enter the tolling agreement, in which case NCUA would have filed suit within the repose period. Noting that "Goldman's voluntary entry into the tolling agreement was permissible legal tolling that is fundamentally unlike equitable tolling," NCUA said Goldman "agreed to toll the statute of repose before its expiration--and thus induced NCUA to forbear from filing suit during the tolling period."

Regarding NCUA's claims under Kansas law, it "dooms Goldman's argument that the tolling agreement is somehow ineffective as to Kansas statutes of repose," said NCUA, adding that American Pipe tolling is "legal tolling that applies to statute of repose even though equitable tolling doctrines do not, so long as the tolling class action was filed before expiration of the statute of repose."

"The policies that preclude equitable tolling of the statute of repose in no way preclude enforcing a voluntary legal waiver of the repose period by sophisticated parties," argued NCUA. "Goldman identifies no benefit to a policy that permits large banks such as Goldman to renege on a voluntarily negotiated agreement to forestall litigation in hopes of reaching a settlement, and there is none," the agency said.

"There is no more sophisticated party in the U.S. than Goldman, which voluntarily entered into the tolling agreement, received the benefit of NCUA's consideration in delaying litigation pending settlement discussions, and then willfully flouted its promises when it sense some advantage to doing so," said NCUA.  "Goldman should not be permitted to profit from such unvarnished misconduct. The court should enforce Goldman's agreement," NCUA concluded.

In a previous ruling that partly dismissed NCUA's claims in a separate but related action against RBS Securities and other defendants, Wu had granted NCUA the leave to amend, or the ability to provide more information. His ruling had indicated that unless tolled by the virtue of American Pipe, all of NCUA's federal claims would be dismissed with prejudice because they are barred by a three-year federal statute of repose. An extender statute did not apply to the federal claims, he said.  The ruling did not affect NCUA's state securities law claims.

The court, in a separate development, has continued a non-appearance status conference that was originally to be held last week to April 12, according to court documents.


RSS





print
News Now LiveWire
Sony hack linked to N. Korea, says U.S.intelligence via @nytimes http://t.co/fE3PtMgEFz
2 hours ago
.@CUNAMutualGroup Klewin shares final thoughts, forecast on lending regulations with @cumagazine before retiring http://t.co/v78QY3QwqB
5 hours ago
Current @CUNA COO @JillTomalin promoted to deputy chief of staff
5 hours ago
#CU Effect:@ChartwayFCU 'branch of the future' 2 benefit members, staff. 2nd installment of new News Now series here:http://t.co/ImBY4nupEj
6 hours ago
U.K. regulators have given formal authorization for the @c_of_e to form a #creditunion.
6 hours ago