The National Credit Union Administration Board filed suit against HSBC Bank USA, alleging it did not fulfill trustee duties for 37 residential mortgage-backed securities trusts, the group said on Friday.

The credit union group filed the suit in federal court in Alexandria, Virginia, in its role as liquidating agent for five failed corporate credit unions and on behalf of some NCUA guaranteed notes trusts. It is seeking damages to be determined at trial.

The NCUA said some $1.97 billion in residential mortgage-backed securities from the trusts were purchased by the U.S. Central, WesCorp, Members United, Southwest and Constitution credit unions between 2004 and 2007. The complaint said HSBC did not properly monitor loan servicers or take timely action on bad loans.

"Instead of protecting the trusts and the certificate holders, HSBC sat by as the trusts wasted away," NCUA Board Chairman Debbie Matz said in a statement. "This failure caused significant harm to trust beneficiaries, including the corporate credit unions and ultimately consumer credit unions."