The NCUA has failed to prove that J.P. Morgan Securities the firm made "material misrepresentations" to the corporate credit unions when selling them residential mortgage-backed securities, according the firm's court filing. And with that J.P. Morgan asked a federal judge to dismiss the agency's June lawsuit against it.
J.P. Morgan alleges that the executives of the corporate credit unions made the investments despite warnings from the bank and the NCUA that they were risky.
"Despite warnings from the offering documents, the news media and even the [NCUA] board itself, the credit unions made the informed decision to plunge the majority of their assets into residential mortgage-backed securities at the height of the housing bubble. That investment strategy–which even the [NCUA] board has condemned as 'aggressive,' 'excessive' and 'unreasonable'–back fired when the housing bubble burst. The credit unions lost their 'unreasonable' wager and subsequently collapsed," according to the filing.
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