The National Credit Union Administration - the top U.S. credit union regulator - said it had paid more than $1 billion in legal fees to 2 law firms to pursue lawsuits against various banks over their sales of toxic mortgage-backed securities (MBS’s) before the 2008 financial crisis.  The contingency fees represented 23.2% of the $4.3 billion the agency recovered in settlements with banks over their sale of faulty securities to 5 credit unions that later failed.

The announcement marked the first time the NCUA had revealed the lawsuits' costs.  NCUA Board Chairman Rick Metsger said the agency previously withheld disclosing its fee arrangements to protect its litigation position and ensure maximum returns.

"Without this fee arrangement, which shifted most of the risk of these legal actions to outside counsel, there would have been no legal investigation of potential claims, no litigation, and no legal recoveries."

The payouts came after settlements with banks, including Morgan Stanley, Bank of America, JPMorgan Chase and Barclays. Most recently, last month the NCUA announced a $1.1 billion deal with Royal Bank of Scotland.

The payouts went to 2 law firms - Korein Tillery, and Kellogg, Huber, Hansen, Todd, Evans & Figel, which pursued lawsuits against the banks. The sum was more than double what another regulator that pursued a similar set of lawsuits against many of the same banks last year said it paid while obtaining an even larger amount of recoveries.