NCUA – The National Credit Union Administration is looking to renegotiate the terms of an agreement with two law firms that to date have received more than $1 billion as part of settlements with big banks and other firms related to the sale of securities to corporate credit unions in the run-up to the financial crisis.
The attempt to renegotiate terms—which to date have been unsuccessful—has also caught the eye of members of Congress, with one representative saying the payments raise “serious questions” about the terms of the contract negotiated by NCUA with the two law firms.
At issue are the $1.1-billion in contingency fees paid to St. Louis-based Korein Tillery and Washington-based Kellogg, Huber, Hansen, Todd, Evans & Figel, which have represented NCUA in 26 lawsuits filed against various entities seeking damages for failed investments. To date, NCUA has recovered more than $5 billion after placing five corporates into conservatorship a decade ago.
Rep. Ann Wagner (R-MO) has sent a letter to NCUA Chairman Mark McWatters stating “The payment of over one billion dollars in legal fees to private counsel raises serious questions about the propriety of the NCUA’s legal fee arrangements, including whether the arrangements were in the best interest of the NCUA,” according to Politico, which first reported the item.
Wagner chairs the House Financial Services subcommittee on oversight.
NCUA Chairman J. Mark McWatters, who is an lawyer, told Politico that the agency had met at least once with the law firms in an attempt to renegotiate the terms of the agreement, which was executed on Sept. 1, 2009. Its outreach was rebuffed, McWatters said.
“The agency should continue its efforts to negotiate a fair and transparent modification of these legal services agreements, where outside counsel has received, to date, over $1.1 billion in fees,” McWatters said in a statement sent to CUToday.info. “In my view, these fees are regrettably excessive, yet our good-faith efforts to reach an equitable accord with the recipient law firms have not succeeded.”
McWatters added, “Neither my fellow NCUA board member Rick Metsger nor I were involved in either vetting outside counsel or negotiating the terms of the corporate credit union-related legal services agreements.”