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Banks Get New Review on Credit Union Agency's Lawsuit

The U.S. Supreme Court told a lower court to take another look at a ruling that let the National Credit Union Administration sue a group of banks for allegedly deceiving investors about mortgage-backed securities.

The justices today ordered reconsideration of the ruling in light of a decision they reached earlier this month on the deadlines for filing some environmental suits.

The NCUA sued banks including units of Wells Fargo & Co. (WFC) and Royal Bank of Scotland Group Plc (RBS) after the agency took over two corporate credit unions. The NCUA says those credit unions invested $1.74 billion in mortgage-backed securities, many of which the agency says were riskier than the offering documents indicated.

The banks contend that federal securities law imposes a firm three-year deadline for suits -- a deadline they say the NCUA missed. A federal appeals court in Denver disagreed, citing a provision in a 1989 law that extends the time for a government regulator to sue on behalf of a failed financial institution.

In ordering reconsideration, the justices pointed to a June 9 decision in a case involving environmental suits.

NCUA has filed similar lawsuits against units of Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. and other banks.

The Supreme Court case is Nomura Home Equity Loan v. National Credit Union Administration, 13-576.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story: Patrick Oster at poster@bloomberg.net Mark McQuillan, Laurie Asseo

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