Back in April I said that the Residential Mortgage-Backed Securities Working Group created back in January was a sham. Perhaps, I'll be proved wrong as the first case on this matter has been filed by the Working Group. The Group has charged JP Morgan with regard to activities by Bear Stearns, which JP bought in the depths of the crisis.
Basically, the Group says that Bear Stearns lied when it sold mortgage securities. They knew many of the mortgages were bad but said nothing to the purchasers. Then, when Bear Stearns went back to the originator of the mortgages, they took the originator's money and did not give it to the buyers as the law says.
I'm still skeptical as to how far this suit will be pursued. After all, there is an election in a little over a month and being seen as the protector of the little guy can't hurt Obama.
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