Tuesday, October 02, 2012

"Yet the Mills of God Grind Slowly, yet . . ."

The federal mortgage task force that was formed in January by the Justice Department filed its first complaint against a big bank on Monday, citing a broad pattern of misconduct in the packaging and sale of mortgage securities during the housing boom. 

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The complaint contends that Bear Stearns [now part of JP Morgan] and its lending unit, EMC Mortgage, defrauded investors who purchased mortgage securities packaged by the companies from 2005 through 2007. 

The firms made material misrepresentations about the quality of the loans in the securities, the lawsuit said, and ignored evidence of broad defects among the loans that they pooled and sold to investors.
Moreover, when Bear Stearns identified problematic loans that it had agreed to purchase from a lender, it was required to make the originator buy them back. But Bear Stearns demanded cash payments from the lenders and kept the money, rather than passing it on to investors, the suit contends.

-from an article in today's NYT entitled "JPMorgan Sued Over Mortgage Securities Pools."

(The quote in the title is from Longfellow's "Retribution')

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