Deutsche Bank and Citigroup settle with U.S. credit union regulator

NEW YORK (CNNMoney) -- The National Credit Union Administration said Monday it became the first federal agency to recover losses on behalf of financial institutions whose failures were tied to bad residential mortgage-backed securities investments.

The agency created by the U.S. Congress to regulate, charter and supervise federal credit unions said Deutsche Bank (DB) and Citigroup (C, Fortune 500) have agreed to pay $145 million and $20.5 million respectively to help pay for losses incurred by five failed credit unions.

"We are fulfilling our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected," NCUA Board Chairman Debbie Matz said Monday. "This settlement furthers our goal to minimize losses and thereby reduce the assessments that all credit unions will have to pay."

Deutsche Bank Securities and Citigroup are among the first major underwriters to propose settlements with the NCUA to help resolve losses from these securities. As part of the settlements, neither bank admitted fault on its part, the NCUA release said.

"We appreciate their efforts to resolve potential claims so that we can avoid the expense and delay of litigation," said Matz.

More folks moving to smaller banks and credit unions

Credit unions pay into a general fund to cover potential losses from failures, but settlements reduce the amount that credit unions need to pay. Since 2009 credit unions have paid $3.3 billion for losses from the five corporate credit union failures. The NCUA says another $1.8 billion to $6.1 billion must be paid by 2021.

"We are pleased to have resolved the NCUA's claims without the parties having to resort to litigation," a spokesperson for Deutsche Bank told CNNMoney.

"Citi is pleased to have resolved this matter," a Citigroup spokesperson said.