The U.S. credit union regulator sued JPMorgan Securities and Bear Stearns & Co on Monday over $3.6 billion in mortgage securities the bank allegedly sold to credit unions that collapsed because of losses from the securities.
The lawsuit by the National Credit Union Administration is its second against JPMorgan involving losses to credit unions. In June 2011 the agency sued it over some $1.4 billion in securities in which JPMorgan was the underwriter and seller. That suit is still pending.
The actions add to a growing list of cases the largest U.S. bank is fighting over conduct by Bear Stearns, which JPMorgan
acquired in 2008.
After the New York Attorney General sued JPMorgan in October alleging that Bear Stearns deceived investors buying mortgage-backed securities in 2006 and 2007, the bank's chief executive, Jamie Dimon, lashed out at the government.
Speaking at a Washington event, Dimon said the company lost $5 billion to $10 billion in Bear Stearns-related costs and is still paying the price for doing the Federal Reserve "a favor" by buying the teetering investment bank.
In the Monday lawsuit, the NCUA alleged that Bear Stearns made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions.
The lawsuit, filed in federal court in Kansas, is the largest such lawsuit the regulator has filed to date.