Feds Tag Banksters w/ Suits On Behalf Of Now-Collapsed Credit Unions Left Holding Bag On Crappy Securitized Mtgs; Regulator: More Complaints To Come
The Wall Street Journal reports:
- Federal regulators accused J.P. Morgan Chase & Co. and Royal Bank of Scotland Group PLC of duping five large credit unions into buying more than $3 billion in mortgage bonds that were "destined to perform poorly," and that quickly sank the credit unions.
- The two civil lawsuits filed Monday in U.S. District Court in Kansas City, Kan., by the National Credit Union Administration are the most aggressive move yet by U.S. regulators to recover losses from Wall Street firms for alleged wrongdoing before and during the financial crisis.
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- The collapse of the five large institutions, called wholesale credit unions, "resulted in the worst crisis faced by the credit-union industry in its history," said NCUA Chairman Debbie Matz. "We believe numerous parties within the chain, primary underwriters and intermediaries as well, have responsibility."
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- Officials at the NCUA, a federal regulator that supervises the nation's credit unions, expect to file additional lawsuits against as many as eight more banks and securities firms that pooled individual mortgages into securities and sold them to the five credit unions, which failed in 2009 and 2010, according to people familiar with the situation.
- The NCUA has issued 986 subpoenas to companies involved in the mortgage machine, including lenders that originate loans, investment banks that sell mortgage-backed securities, mortgage servicers and credit-ratings agencies, a spokesman said.
For more, see Feds Sue Bankers Over Fall in Bonds (requires paid subscription; if no subscription, GO HERE; or GO HERE - then click appropriate link for the story).
For the lawsuits, see:
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