Schneiderman Sues JPMorgan Over Bear Stearns ‘Shit Breather’ Mortgage Bonds
Every now and then, a lawsuit or legislative report emerges to remind us just how out-of-control the U.S. mortgage business was in the years leading up to the financial crisis, and a civil tort filed today by the New York State Attorney General Eric Schneiderman is a fine example. (A congressional investigation into Countrywide’s program to provide discounted loans to lawmakers, the results of which were published in July, also comes to mind.)
Mr. Schneiderman’s suit brings fraud charges against JPMorgan with widespread misconduct in the packaging and sale of mortgage securities committed by Bear Stearns. These practices, of course, helped sink Bear Stearns, leading the investment bank to be acquired by JPMorgan in 2008, and the broad details—that Bear so coveted the profit available by selling mortgage-backed bonds that it became indiscriminate in the loans it purchased for securitization—are well known, and were common to any number of Wall Street banks. For all the ubiquity of the alleged practices, Mr. Schneiderman’s complaint still makes for a shocking read: Read More
