Federal regulators accused J.P. Morgan Chase & Co. and Royal Bank of Scotland Group PLC of duping five large credit unions into buying more than $3 billion in mortgage bonds that were “destined to perform poorly,” and that quickly sank the credit unions.
The old story, of course. The banks, it is alleged, knew these deals were worthless (or close to it) and yet sold them on as “pristine” and “quality” mortgage paper. When they blew up the banks said “so sorry, so sad, bye bye” and since fees were all they cared about in the first place…
Well, the NCUA says no; here are the complaints. They’re quite good; the salient allegation is:
54. At the time of purchase, the Credit Unions were not aware of the untrue statements or omissions of material facts in the Offering Documents of the RMBS. If the Credit Unions had known about the Originators’ pervasive disregard of underwriting standards— contrary to the representations in the Offering Documents—the Credit Unions would not have purchased the certificates.
This marks a new phase in the mortgage mess; remember, the NCUA is effectively a government agency, providing insurance services for depositors. The banksters, of course, believed they had bought and paid for all appropriate pieces of the government in order to prevent this sort of thing from happening.
It appears they forgot a few “campaign contributions.”
Complaints against JP Morgan and RBS found here and here; they’re worth a read even though they’ll take you a while to go through them. The tables on losses in the second complaint, in particular, starting around page 40 are simply amazing.