Aug 20 (Reuters) - A U.S. appeals court has handed a major victory to a federal regulatory agency suing big banks over the sale of toxic mortgage-backed securities to since-failed credit unions, ruling that the lawsuits were not filed too late.
The 10th U.S. Circuit Court of Appeals in Denver ruled on Tuesday in favor of the National Credit Union Administration (NCUA), which could be a boost for the Federal Housing Finance Agency (FHFA), which is also suing banks over bad mortgage securities, and quickly seized on the decision.
The 10th Circuit had ruled in August 2013 that lawsuits filed by the NCUA against the banks, including Royal Bank of Scotland Group Plc, Nomura Holdings Inc and Wells Fargo & Co, could move forward, even though they were filed three years after the toxic securities were sold.
The court ruled that a U.S. law passed in 1989 after the savings and loan crisis extended the time period that the NCUA could sue on behalf of credit unions that had been placed into conservatorship.
The NCUA had filed lawsuits in Kansas on behalf of two failed credit unions, U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, over securities they bought for $1.74 billion.
It has filed several similar lawsuits and recovered more than $1.75 billion in settlements so far.
But in June, the U.S. Supreme Court directed the 10th Circuit to reconsider its ruling in light of the high court's decision in an environmental case, CTS v. Waldburger, which raised similar questions about the timing of lawsuits.
On Tuesday, U.S. Circuit Judge Scott Matheson, writing for a three-judge panel, reiterated its opinion, saying the environmental law and the one in the NCUA's case were "fundamentally different."
"We're pleased with the judges' ruling on this issue, and it is good news for credit unions," said John Fairbanks, an NCUA spokesman.
Representatives for the banks either declined comment or did not immediately respond to requests for comment.
The ruling could help the FHFA, which in 2011 filed 18 lawsuits over mortgage-backed securities bought by mortgage giants Fannie Mae and Freddie Mac.
The FHFA immediately sent a copy of the ruling on Tuesday to U.S. District Judge Denise Cote in New York, who is weighing a similar challenge after the Supreme Court's ruling.
Several banks, including HSBC Holdings Plc, Goldman Sachs Group Inc and Nomura, had asked Cote to reconsider an earlier decision that the FHFA was not too late in suing.
Goldman and HSBC are scheduled to go to trial in the FHFA cases on Sept. 29. A trial in the Nomura case is due to start Jan. 26.
Other banks have already settled, enabling the FHFA to recover $16.1 billion. Goldman has been discussing a settlement with the FHFA that could cost $800 million to $1.25 billion, a source told Reuters in July.
The case is National Credit Union Administration Board v. Nomura Home Equity Loan Inc, 10th U.S. Circuit Court of Appeals, No. 12-3295. (Reporting by Nate Raymond in New York; Editing by Jeffrey Benkoe)