NY Attorney General Says More Suits Will Follow JPMorgan
The New York lawsuit over mortgage- backed securities against JPMorgan Chase & Co. (JPM), the biggest U.S. bank, will serve as a template for suits against other issuers, state Attorney General Eric Schneiderman said.
Pedestrians pass in front of the JP Morgan Chase & Co. headquarters in New York. Photographer: Scott Eells/Bloomberg
Oct. 2 (Bloomberg) — New York State Attorney General Eric Schneiderman, speaks about the lawsuit filed against JPMorgan Chase & Co. for alleged mortgage fraud. Schneiderman accused the bank’s Bear Stearns unit, which JPMorgan bought in 2008, of using “depceptive” practices in selling hundreds of billions of dollars in mortgage bonds. U.S. Attorney for the District of Colorado John Walsh, U.S. Department of Housing and Urban Development Secretary Shaun Donovan, Assistant Attorney General Lanny Breuer and Acting Assistant Attorney General Tony West also speak at the news conference in Washington. (Source: Bloomberg)
The Bear Stearns mortgage unit packaged $212 billion in mortgage bonds from 2003 through 2006, according to the complaint. Losses on $87 billion of those bonds packaged during just two of those years total $22.5 billion so far, it estimated. Schneiderman said he wants the bank to disgorge all money it obtained in connection with or as a result of the alleged fraud.
“This is a workable template for future actions against issuers of residential mortgage-backed securities that defrauded investors and cost millions of Americans their homes,” Schneiderman said in a statement. “We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York’s homeowners and investors.”
New York hasn’t fully identified the losses in the JPMorgan case, Schneiderman said at a teleconference today.
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