The likelihood that Goldman Sachs or any other big financial institution would face additional charges over their role in the financial crises seemed to be waning when the little known National Credit Union Administration rode into town and took on the leader of the pack.

The NCUA, which regulates credit unions at the federal level, has slapped Goldman Sachs with civil charges that it grossly misrepresented the risks of various residential mortgage-backed securities in sales material. NCUA charges that that resulted in massive losses to credit unions that invested in these securities. The NCUA has already sued JP Morgan and three others over similar issues and more cases are on the way. The complaint seeks $491 million.

Recall that Goldman Sachs paid $550 million to settle CDO-related fraud charges with the SEC. In its lawsuits filed so far, the NCUA has sought $2 billion. The carnage to wholesale credit unions as a result of the mortgage crisis wasn't widely covered. There were five wholesalers that were placed into receivership and liquidated by the NCUA. These wholesalers provide a variety of services to retail-oriented credit unions, which as a group did not fare as badly as banks in the crisis. The liquidations have placed a burden on insurance funds aimed at supporting troubled institutions.

For Goldman Sachs, the best choice most likely would be to settle. You also have to wonder about the likelihood of more suits, especially private suits. Like Bank of America, all the previous reserving and settling may have created a false sense that the worst is over. But the likes of AIG and others pondering legal action beg to differ.

For more:
- here's the release

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