Tuesday, June 21, 2011

Banks, Credit Unions, and Big Lawsuits

We noted that the banks had prevailed upon the Pubbies in the Wisconsin legislature to insert language about credit unions. Natch, the credit unions were unhappy; nobody asked them about the language, and the CU's certainly didn't ask for it.

Maybe it was just a case of revenge.

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. --WSJ quoted at Ticker

Gee. "Mr. Clean"--Jamie Dimon? Say it ain't so!!!

NCUA is suing because when the CUs failed, NCUA had to pick up the pieces.

Sample language from the complaint:

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 calls for popcorn!

1 comment:

Fix Your Credit said...

Very informative. Thanks for posting.