Credit unions will sue to recoup lost funding

The National Credit Union Administration is preparing a lawsuit against some of the nation's biggest investment banks for billions of dollars it claims were lost during the financial meltdown, The Wall Street Journal reports. The NCUA's suit claims that the downfall of five of its biggest institutions can be directly attributed to the evaporation of securities held by Wall Street firms. According to the WSJ, the NCUA will target Goldman Sachs, Merrill Lynch (now part of Bank of America), Citigroup and J.P. Morgan Chase & Co., seeking to recoup approximately $50 billion. The NCUA states that the lost billions caused its members to lose business. Regulators gained control of the five largest credit unions during 2009 and 2010, leading to a mountain of toxic bonds that total $25 billion. The WSJ reports that consumers have a total of $680 billion in deposits in the nation's credit unions. The lawsuit by the NCUA, a federal agency, follows a suit recently filed by the Federal Deposit Insurance Corporation that seeks to recover nearly $900 million in assets from the families of two former Washington Mutual executives. They are accused of "shielding" liquid and fixed assets during a federal investigation.