The National Credit Union Administration (NCUA) [official website] on Friday filed a lawsuit [compliant, PDF; press release] against JPMorgan Chase & Co. [corporate website] for the sale of $2.2 billion of faulty residential mortgage-backed securities (RMBS) to credit unions. The securities were sold by Washington Mutual bank and its subsidiaries which were ultimately acquired by JPMorgan in 2008. The suit alleges that the "the firms made misrepresentations in connection with the underwriting and subsequent sale of" the RMBS products. It further alleges that the firms responsible for originating the mortgages that formed the basis of the securities "systematically disregarded" underwriting guidelines. Finally, the lawsuit states, "The RMBS purchased by the Credit Unions suffered a significant drop in market value. The Credit Unions have sustained significant losses from those RMBS purchased despite the NCUA Board's mitigation efforts."
Major banking firms have faced numerous lawsuits regarding their business practices. In December the NCUA brought a suit [JURIST report] against JPMorgan for similar RMBS products sold by Bear Stearns, which was also subsequently purchased by JPMorgan. In July JPMorgan agreed to a $100 million settlement [JURIST report] in a suit brought by customers claiming unreasonable fees and a three percent increase on monthly minimum payments by credit card holders. In early June the firm was granted [JURIST report] permission to pay $44.6 million to resolve allegations of fraudulent bidding practices for state and local government investment securities at taxpayers' expense. The settlement followed JPMorgan's agreement [JURIST report] last July with the US Department of Justice [official website] to pay $228 million to federal and state authorities. One month earlier JPMorgan again settled [JURIST report] at $153.6 million for fraud charges brought by the SEC for misleading investors during the housing crises. In July 2010 Goldman Sachs [corporate website] agreed to a $550 million settlement [JURIST report] with the SEC to resolve similar charges.