Skip to comments.Allstate sues JPMorgan Chase over sale of toxic RMBS
Posted on 02/18/2011 8:52:34 AM PST by FromLori
Insurance giant Allstate is suing JPMorgan Chase (JPM: 47.72 -0.21%) and subsidiaries Bear Stearns and Washington Mutual for fraudulently selling the insurer more than $750 million in residential mortgage-backed securities backed by toxic loans.
In its complaint, Allstate alleges the defendants "made numerous misrepresentations and omissions regarding the riskiness and credit quality" of the loans backing the securities sold as part of the transaction. JPMorgan Chase acquired Bear Stearns and Washington Mutual along with the banks' assets back in 2008 when the housing meltdown hit. While both firms are technically defunct, each still has structured finance trading platforms unwinding.
Allstate issued a statement about the suit Wednesday saying the offerings made by the financial institutions "contained untrue statements and omitted material facts." The insurer said, "Between 2005 and 2008, Allstate purchased more than $750 million in mortgage-backed securities from those defendants."
Allstate alleges the banks roped the insurance giant into the transaction by suggesting the securities marketed by JPMorgan, Bear Stearns and WaMu were backed by highly-rated mortgage securities.
Instead, Allstate says JPMorgan's securities hid a "toxic mix of loans given to borrowers that could not afford the properties" and who were likely to default, according to the complaint.
(Excerpt) Read more at housingwire.com ...
Good for AllState. I wish them luck 0 time to take Rockefeller down a peg or two!
Why would Allstate sues JPMorgan Chase over sale of toxic right mouse buttons?
I say good too they are a scummy bank
JPMorgan CEO Jamie Dimon Donates Serious Cash to Democrats
JPMorgan Chase Asked to Stop Funding ACORN
Hopefully there will be many, many more such suits.
Great info - “Obama’s favorite banker” - thanks. He’s also a graduate from the infamous Uni of Chicago, a CFR and Trilateral Commission guy, iow, he’s sold his soul to the devil. He was CEO of One Bank which merged with JPMorgan a while back, it was then he got this job. Why one might wonder....
Allstate had ample cause, ample fiduciary responsibility and ample means to do its own due diligence on its investments. Other investors did their due diligence and did not make the same investments that Allstate did.
Now Allstate wants to sue?
Sorry, if anyone should be suing it should be a class action of Allstate’s owners and if anyone should be sued its Allstate’s board of directors and senior officers.
Remember when Goldman Sachs had a Friend in the WH named Rahm Emanuel? J.P. Morgan also has a friend in the WH by the name of Chicago Bill Daley.
Obama's tapping Chicago Bill Daley for WH COS was part of Ohaha's "No-Chicago-Sleazeballs-Left Behind initiative" (to paraphrase Malkin). The first Obama admin----Jarrett, Axelrod, Gibbs, Rahm Emanuel---was top-heavy with people having a personal history with Obama, direct access, and a strong, political bent.
Bill "Let's Count the Ballots Again in this Locked Room" Daley is the new Ohaha COS ......... Daley headed the Chicago Branch of The Daley Family Vote Mfg Division. The Daley family motto is "When We Fix Elections, They Stay Fixed."
NOTE During the 2008 Democratic presidential primaries, Daley was a prominent supporter of Barack Obama. On November 5, 2008, Daley was named to the advisory board of the Obama-Biden Transition Project.
MORE DALEY TIDBITS: Bill Daley (brother of Chi/Mayor Richard Daley), is former Commerce Secy under Clinton and long-time executive at Wall Streets JP Morgan Chase.
REFERENCE Lehman's Bankruptcy Estate Sues J.P. Morgan
WSJ | 5/26/2010 | BY MIKE SPECTOR And SUSANNE CRAIG
FR Posted May 26, 2010 by markomalley
Lehman's Bankruptcy Estate Sues JP Morgan Chase & Co., alleging that JP Morgan illegally siphoned billions of dollars from Lehman in the days before the investment bank filed the largest bankruptcy in US history.
The lawsuit, filed Wednesday in US Bankruptcy Court, New York, alleges that JP Morgan Chief Executive James Dimon and other top executives used inside knowledge to take advantage of Lehman as its financial state worsened.
JP Morgan coerced Lehman to turn over $8.6 billion in collateral in Sept 2008, triggering a liquidity squeeze that contributed to Lehman's collapse, the suit said. The estate is hoping to recoup billions in collateral the bank demanded, and other damages. (Excerpt) Read more at online.wsj.com ...
Daley became associated with Amalgamated Bank of Chicago, where he was first vice chairman (19891990) and then president and chief operating officer (1990-1993). Daley returned to the practice of law, as a partner with the firm Mayer Brown (then Mayer, Brown & Platt) from 1993 to 1997, where he served on the board of Fannie Mae.
In December 2001, he was appointed President of SBC Communications Inc. to help reform the company's image.
In May 2004, Daley was made Midwest Chairman of J.P. Morgan Chase and Bank One Corp. to oversee post-merger operations from Chicago. (See JB Morgan billion dollar looting reference above--circa 2008.)
Daley currently serves on the Boards of Directors of Boeing, Merck & Co., Boston Properties, Inc., and Loyola University Chicago. He is also a trustee of Northwestern University and sits on the Council on Foreign Relations.
In 1993, he served as special counsel to the President on issues relating to the passage of the North American Free Trade Agreement (NAFTA). In 1997, Daley became Secretary of Commerce in the second administration of President Bill Clinton, and he remained at that post until July 2000, when he resigned to campaign for the Vice President.
After he resigned as Commerce Secretary he became chairman of Vice President Al Gore's presidential campaign. He was portrayed in the HBO film Recount, about the Florida election recount of the 2000 presidential election, by actor Mitch Pileggi.
NOTO BENE Daley currently serves on the Boards of Directors of Boeing. Boeing's Corporate HQ moved to Chi-town in Sept of 2001. Boeing was "offered multi-million dollar tax breaks" b/c other cities were wooing Boeing.
So guess what Chicago Mayor facilitated the Boeing FREEBIES - which shifted a huge tax burden to Homeowners for decades to come?
Yup----it was Richard M. Daley, Bill's brother. And then Bill Daley gets picked to be on Boeing's Board of Directors. Watta coincidence.
JPMorgan overcharged thousands of military families, improperly foreclosed
Housing Wire | by JON PRIOR / FR Posted by DeaconBenjamin
JPMorgan Chase overcharged roughly 4,000 troops on their mortgage and improperly foreclosed on 14 of the families, a spokesperson for the bank said Mon.
Under the Servicemembers Civil Relief Act amended 2003, lenders can be required to lower mortgage rates for active-duty military personnel to 6% and cannot pursue a foreclosure, but according to the report, Chase was slow to make the change for many of the families, charging Marine Capt.
Jonathan Rowles as much as 10% and hounding him with debt collection calls for as much as $15,000 in arrears, according to NBC news. The Rowles case against Chase is still pending, but the bank said it had made the mistakes and is trying to correct the problem.
In a statement sent to HousingWire, Chase said it will be sending roughly $2 million in refunds to families that have been overcharged and will give back the homes that were improperly foreclosed.
Major servicers are under investigation from regulators and the 50 state AGs for other problems in the foreclosure process. Iowa AG Tom Miller said in a statement sent to HousingWire that Chase disclosed the overcharges to him "very recently." "I m concerned and troubled over JP Morgan Chase's disclosure," Miller said. "Our deployed men and women should focus on their deployment.
Neither they, nor their families, should have to endure this kind of financial distraction back home."In Dec, he did say a settlement compensating homeowners was one of many options on the table. "We made mistakes here and we are fixing them," a Chase spokeswoman Kristin Lemkau said. The bank said it is reviewing how it services loans to military personnel, and it has implemented a team that works only for these borrowers.
Any financial company who says they didn't understand the risk of investing in a MBS pool is a fool!
The whining, hand wringing, and blame placing gets very old.
Where did everyone’s testicles go in this nation?
Other investors DID their due diligence and did not make the same investments that Allstate did.
lol Allstate isn’t the only one suing the banks who sold them toxic garbage so is Blackrock, MBIA, the New York Fed, even the GSE’s.
Back when ratings agency’s were paid by the buyer’s but the banks took that over and now days the sellers/banks pay the ratings agencies so of course they rated the crap as AAA.
It does not matter who is suing on the same basis as Allstate.
And, it does not matter what Fitch, S&P and others said about an investment.
I worked for a non-profit pension and insurance outfit for over 20 years. We had our own internal investment department. At no time could our chief investment officer have kept his job his people made a really bad investment and his answer had been that the custodian bank, our brokers and the ratings outfits all said it was good. Our board would have asked: didn’t we do our own due diligence?
I remember leaving very late one night and finding our fixed-investment manager was still there. I asked him why so late. He said he was looking over some “bond offerings” and developing an answer for the chief investment officer as to how we should rate them. I asked him were there not outfits like Fitch & S&P that could do that, and does not our custodian bank and our brokers have an opinion?
He agreed that was true, but added, that, in his opinion, if your put twenty bond traders, Fitch, S&P, your bank, individually, in different rooms and asked them all to rate a bond you’d get twenty different answers. And, at the end of the day he, our fixed investment manager was the one who’s job was on the line.
Why didn’t Allstate do the same. They didn’t and that’s Allstate’s fault.
Many other institutions operated the same way, AND, just like my old pension fund, did not make the same mistakes that Allstate, and others made.
It is Allstate’s board members and senior officers that should be sued.
We’ll have to agree to disagree I hope they win the lawsuit and I hope many more lawsuits follow. I’m sick of the big global banks and their fraud and how they have purchased our government couldn’t happen to a more deserving group. They should have been allowed to fail in the first place.
They will be - this is probably a CYA attempt on the management's part.