JP Morgan to face lawsuits over failed credit unions

American courtroom

U.S. District Judge John Lungstrum said the National Credit Union Administration may pursue civil claims that the bank and two companies it bought, Bear Stearns and Washington Mutual, misrepresented the quality of dozens of securities sold to four credit unions in 2006 and 2007.

Reuters News reports that in a separate decision on Tuesday, the Kansas City-based judge also let the regulator pursue part of a lawsuit against UBS over securities sales to two of the credit unions.

The NCUA is pursuing 11 lawsuits as the conservator of five corporate credit unions that suffered losses in the U.S. housing crisis after buying more than $14bn of mortgage securities.

It said about $7bn of those securities were traceable to JP Morgan, with about one-half sold or underwritten by Bear, one-third by Washington Mutual and one-sixth by JP Morgan itself. JP Morgan bought Bear and Washington Mutual in 2008.

Tuesday's decisions allowed the NCUA to pursue claims over roughly one-half of the securities in these cases, while dismissing claims over the remainder.

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JPMorgan must face lawsuits over failed credit unions -judge

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