JP Morgan sued for Bear Stearns mortgage securities for $20 billion in losses

JP Morgan has been sued in a civil action by the New York attorney General for allegedly defrauding investors who lost more than $20 billion on mortgage backed securities sold by Bear Stearns. JP Morgan bought the investment bank Bear Stearns in March 28 at the behest of the US government. ┬áThe lawsuit accuses Bear Stearns of failing to ensure the quality of loans underlying residential mortgage-backed securities. The complaint says that the bank “systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects underlying loans.” The lawsuit says that this led to the inclusion of When many of the homebuyers defaulted their mortgages this linked securities to bad debt and caused billions in losses at banks who were forced to write down the value of their investments. Banks around the globe lost billions of dollars because these securities were resold globally.