US government sues RBS over dud bonds

A US government agency is suing Royal Bank of Scotland over dud mortgage bonds it sold to an American credit union before the financial crisis. 

RBS, which had to be bailed out by the British government and is now majority owned by the UK taxpayer, sold $565m of top-rated AAA mortgage bonds to a credit union, US Central, in 2006. However, amid the financial crisis, the bonds collapsed and are now junk-rated. 

The US government's National Credit Union Administration, which regulates the countries small banks - which are known as credit unions - and is in charge of selling off the assets of those that collapsed during the financial crisis, said: "NCUA has a responsibility to do everything in our power to seek maximum recoveries from those involved in the issuing, underwriting and sale of the faulty securities that resulted in the failures of five of the largest wholesale credit unions. 

"Those who caused the problems in the corporate credit union system should pay for the losses."

The NCUA has also filed suit against JP Morgan Chase and is expected to take action against up to 15 Wall Street banks. 

Read a full report at the Independent. ·