JPMorgan Securities and Bear Stearns & Co. have been sued by the US credit union regulator over $3.6 billion in mortgage securities that the bank reportedly sold to credit unions that collapsed after losses from the securities.
The lawsuit was filed on Monday by the National Credit Union Administration and is the second against JPMorgan that involves losses to credit unions, reports Reuters.
The agency last sued the bank in June of last year over about $1.4 billion in securities where JPMorgan participated as the underwriter and seller. The first suit is still pending.
The actions on Monday are just the latest addition in a growing list of cases against the largest US bank that they are fighting because of conduct involving Bear Stearns, which JPMorgan purchased in 2008. The bank’s chief executive, Jamie Dimon, has lashed out at the government, especially in light of a lawsuit that was filed in October by the New York Attorney General.
The October lawsuit alleges that Bear Stearns deceived investors who were buying mortgage-backed securities in 2006 and 2007. Dimon stated at an event in Washington that the company lost $5 billion to $10 billion in Bear Stearns-related costs.
North Jersey notes that the lawsuit filed against JPMorgan on Monday alleges that Bear Stearns either misrepresented or hid information about mortgage-backed bonds that were sold to four different credit unions. The allegations mean that the bank allegedly broke federal and state security laws. NCUA board Chairman Debbie Matz said in a statement:
“Firms like Bear Stearns acted unfairly by ignoring the rules for underwriting. They packaged these securities and then told buyers the paper was sound. When the securities plunged in value, we learned the truth.”
A representative for JPMorgan Chase had no comment on the most recent lawsuit filed against the bank.