JP Morgan hit by lawsuit for Bear Stearns

City A.M. Reporter
JP Morgan Chase was last night hit with a lawsuit for fraud over faulty mortgage-backed securities packaged and sold by the former Bear Stearns.

The lawsuit, filed by New York Attorney General Eric Schneiderman, alleged a “systematic abandonment of underwriting guidelines” in the selling of home loans that went into securities offered by Bear Stearns.

JP Morgan acquired Bear Stearns in March 2008, at the start of the financial crisis, and pointed out the legal action was “entirely about historic conduct by that entity.” In a statement, JP Morgan also said it intended to contest the allegations.

It was the first action to come out of a working group created by President Barack Obama to go after alleged wrongdoing in the financial crisis.

Obama, due to debate his Republican rival Mitt Romney tomorrow night, created the group to “hold accountable those who broke the law” and “help turn the page on an era of recklessness.”