JPMorgan is in deep water. The United States Justice Department is investigating their role in misleading clients about mortgage products, Reuters reported.
Bear Stearns, which was acquired by JPMorgan Chase in 2008, is known as the go-to for mortgage securities. Now in this probed case, the Department of Justice is seeking more information from third parties familiar with their dealings and questioning their reputable transactions. Although, many institutions such as JPMorgan have not been held accountable for creating the financial crisis in the first place. They bought Bear Stearns as a result of a fire sale pushed by the government, Reuters reported.
This all arose as a result of the Residential Mortgage-Backed Securities Working Group that President Barack Obama introduced in last year's State of the Union Speech, reported Reuters. The co-chairs of the working group also include New York Attorney General Eric Schneiderman.
Supposedly, the quality of the mortgage loans was misleading. The investigation is on-going and spokespersons from both JPMorgan and the DOJ have declined to comment.
MBIA Inc. filed a case against JPMorgan last September and sought to recover damages from a third party that poorly reviewed mortgage securitizations loans. Specifically, one-third of the loans were not abiding by current guidelines or laws.
According to Reuters, Bear Stearns altered spreadsheets to hide the problems of the loans, which included the removal of 50 columns of valued information. That error file was subsequently sent to MBIA triggering the case. The file was retrieved in New York State Supreme court.
There are a host of investigations pending for JPMorgan's dealings through Bear Stearns. The Securities and Exchange Commission is saying the bank mislead buyers on the quality of home loans, which supported $1.8 billion in residential mortgages.
Jamie Dimon, JPMorgan's Chief Executive, told Reuters they're in deep water for saving Bear Stearns, calling it "a favor" to the Federal Reserve.
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