Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
Judge Upholds, Dismisses Some NCUA JP Morgan Claims
KANSAS CITY, Kan. (9/5/13)--The National Credit Union Administration's (NCUA) case against JP Morgan and related defendants, one of many cases in which the agency alleges financial firms oversold the value of certain mortgage backed securities (MBS), can move forward. U.S. District Court for the District of Kansas Judge John Lungstrum this week dismissed some charges filed by the agency, while upholding others.

"These decisions were not unexpected, and we are pleased that all four cases are proceeding," the NCUA said. JP Morgan is being charged as a successor-in-interest to Washington Mutual Bank, and WaMu Capital Corp., Long Beach Securities Corp., and WaMu Asset Acceptance Corp. are also named in the JP Morgan suit.

Lungstrum in his opinion denied a defendant motion to dismiss the NCUA's claims against them, and their request to vacate some claims due to a lack of subject matter jurisdiction. However, the court upheld defendant requests that some NCUA claims be dismissed due to statute of limitations issues.

JP Morgan issued and underwrote MBS's that were sold to U.S. Central FCU, Western Corporate FCU and other corporates from 2006 to 2007. The corporates collapsed in 2009, and NCUA, as their liquidating agent, sued a number of Wall Street banks who issued or underwrote the securities that contributed to the corporates' collapse.

NCUA's lawsuits, including the one against JP Morgan, allege the banks made numerous misrepresentations and omissions of material facts in the documents offered the failed corporates. The agency alleges systemic disregard of underwriting guidelines stated in the offering documents and says the alleged misrepresentations caused U.S. Central and WesCorp to believe the risk of loss on the investments was minimal, when in fact, the risk was substantial.

JP Morgan and its co-defendants have claimed that NCUA did not file these MBS cases early enough. The NCUA on Wednesday noted that these timing issues are currently being discussed in related cases in the Tenth Circuit Court of Appeals.

"This is lengthy and complex litigation, and NCUA intends to continue to aggressively pursue responsible parties," the agency added.

In addition to JP Morgan and RBS Securities, NCUA has filed lawsuits against Wachovia Capital Markets and Wells Fargo, Barclay's Capital Inc., Goldman Sachs, and UBS Securities. The agency has already settled claims of more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.


RSS print
News Now LiveWire
#RBC draws letters from @SenatorBegich, @SenShelby to @TheNCUA See #NewsNow http://t.co/JvLBwkHwxF
35 minutes ago
It's #summercamp with a financial literacy, #creditunion twist http://t.co/5eaps9ZoVB
2 hours ago
Mich #creditunions encourage everyone to #CULunchLocal Oct 14 as part of #ICUDay http://t.co/NZp71fgr8Z
3 hours ago
.@IllinoisLeague Hession: #HB5342 cause for celebration...will serve as a model across the country for state, fed regulators @GovernorQuinn
3 hours ago
.@GovernorQuinn signs #HB5342 providing parity for state-chartered #creditunion examinations via @IllinoisLeague http://t.co/yrhoCkE4ER
4 hours ago