New York State’s Attorney General has sued one of the big Wall Street banks for its role in the subprime mortgage crisis which led to the Wall Street meltdown.
In the first lawsuit of its kind, AG Eric Schneiderman claims that Bear Stearns, which was later purchased by JP Morgan Chase & Co., is guilty of a pattern of deceit in its evaluation of mortgage backed securities.
To date, the firm that was Bear Stearns has incurred losses of $22.5 billion dollars. The suit against JP Morgan Chase & Co. was brought by Schneiderman in his capacity as co-chair of President Obama’s Residential Mortgage Backed Security Working Group.
Schneiderman asserted, “This is what created the housing bubble. This is what created the crash. This is what created the worst recession since the 1930s. And this case is an important part of showing the American people there will be accountability.”
[COVE playersize=”512×288″ chapterbar=”on” episodemediaid=”2286131638″]Susan Arbetter of The Capitol Report reports on the new lawsuit brought by the Attorney General Eric Schneiderman against JP Morgan Chase & Co.
Dina Levy, special assistant to Schneiderman elaborated to The Capitol Report, “It’s a first step, not the last step, but it’s significant not only because it’s the first action of the committee but also because it is the first claim that looks at the internal workings of an organization.”
The lawsuit comes on the heels of news last week that the AG’s office will provide $60 million from the National Mortgage Servicing Settlement to fund housing counseling and legal services at providers around the state. There are two groups overseeing these awards: Empire Justice Center and the Center for NYC Neighborhoods.
Kirsten Keefe, senior attorney of the Empire Justice Center, explained, “The Center for NYC Neighborhoods is in New York City. They will really be an intermediary with the grantees overseeing the contracts with housing counseling and legal programs. And then the Empire Justice Center is responsible for all the grant management programs outside of New York City.”
According to the New York Federal Reserve, there are more than 140,000 mortgages across the state that are considered seriously delinquent, which is defined as in foreclosure or more than 90 days overdue.