Defendants systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans.The office of New York Attorney General Eric Schneiderman • Discussing the fraud lawsuit filed against JPMorgan on Monday, regarding defective loans backing securities which allegedly cost their investors billions of dollars. The lawsuit involves a firm which was owned by Bear Stearns, which JPMorgan purchased in 2008 amidst the financial crisis. (JPMorgan would like to emphasize that the charges are “historic” in nature.) The lawsuit is the first action by the the Residential Mortgage-Backed Securities Working Group, a task force which is basically going back and taking on the faults that caused the financial crisis — years after the fact.
» Whoa! Did your heart just stop? Ours did too. It actually created a short delay in posting this. *whew* Now that we’ve caught our breath, let us explain. After Bear Stearns went under in early 2008, a special plan was put in place to offer emergency, quickly-paid-back loans to banks during the financial crisis to ensure they continued to run smoothly. All loans required collateral, all were low-interest, and all have already been paid back. The program also ended in May of last year, so no worries about any residual effects. But yeah. Have you ever seen $9 trillion? It would probably require dozens of Scrooge McDuck’s money vaults.