Posted Oct 25, 2012 04:09 pm CDT
Two law firms could collect hundreds of millions of dollars in contingency fees as result of lawsuits filed on behalf of a U.S. regulator.
The two law firms are Kellogg Huber Hansen Todd Evans & Figel and Korein Tillery, the Wall Street Journal (sub. req.) reports. They represent the National Credit Union Administration in suits accusing banks of misrepresenting the risk of mortgage-backed securities sold to credit unions that later failed. The suits seek to recover up to $9 billion in losses to replenish the federally created Credit Union Stabilization Fund.
The law firms’ role in the litigation is controversial not only because of the potential big payout. Another issue is whether the NCUA violated an executive order signed by President George W. Bush that bars federal agencies from hiring lawyers in contingency arrangements.
House Oversight Committee Chairman Darrell Issa, R-Calif., is raising questions about the contingency agreement. He has asked the NCUA’s inspector general to determine whether the executive order bars the arrangement.
John Ianno, the NCUA’s associate general counsel, talked generally about the application of the executive order in an interview with Wall Street Journal. He said the order doesn’t bind an independent agency acting as a liquidator of failed credit unions.