2012-12-17 — mortgagenewsdaily.com
``NCUA charges that Bear, Stearns made numerous misrepresentations and omissions of material facts in the offering documents of the securities. Underwriting guidelines in the offering documents were "abandoned" the complaint charges, and the misrepresentations caused the credit unions to believe the risk of loss was minimal. In fact, these securities were "significantly riskier than represented" and "routinely overvalued." The faulty securities, NCUA contends, "were destined from inception to perform poorly." J.P. Morgan is party to the suit because it bought Bear Stearns at a virtual fire sale in 2008 when it became apparent that the securities firm could not survive because of its mortgage-related losses.
The four credit unions that bought the securities and subsequently failed were U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions. NCUA insures its member credit unions through a fund similar to that of the Federal Deposit Insurance Corporation and it said the failures caused significant losses to the credit union system.''
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