Regulators blame banks for credit union losses: WSJ

Reuters

(Reuters) - U.S. regulators are blaming some of the biggest Wall Street firms for the collapse of five wholesale credit unions and are threatening to sue the banks to recover up to $50 billion of soured investments, the Wall Street Journal reported on Wednesday.

The National Credit Union Administration accused Goldman Sachs <GS.N>, Bank of America's <BAC.N> Merrill Lynch unit, Citigroup <C.N> and JPMorgan <JPM.N>, of misrepresenting risks of mortgage-backed securities to the wholesale credit unions, the Journal said, citing people familiar with the matter.

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JPMorgan and Citigroup declined to comment. Spokespeople for Goldman and Bank of America did not immediately respond to requests for comment.

The five wholesale credit unions heavily invested toxic mortgage-backed bonds, which passed into the hands of the NCUA after it seized the unions in 2009 and 2010. Those bonds are worth about $25 billion, half their face value, the paper said.

The NCUA were not immediately available for comments.

(Reporting by Arup Roychoudhury; Editing by Louise Heavens and Derek Caney)