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.
» So, um, what happened?! To put it simply, the company has a lot of work to do to unravel the bad investments they made, and while they managed to pull out from the most volatile part, they haven’t gotten out entirely. Remember how angry you were when you found out JPMorgan Chase announced the trading loss? Quadruple that.
Video of the morning: As JPMorgan Chase head Jamie Dimon was getting grilled in front of the Senate Banking Committee, a bunch of liberal activists showed up, shouting “STOP FORECLOSURES NOW!” (among other things) before getting kicked out. In case you’d like to watch this ongoing event, click over here.
» The American companies include: Bank of America, JPMorgan Chase, Morgan Stanley, Goldman Sachs, and Freddie Mac. Two of the top three companies on the list are Chinese. On the upside, the Treasury has as much money as Google, so that’s kind of a nice consolation prize.