Saying that it informed the corporate credit unions of the risks and pointing to the failures of the corporates' executives and the NCUA, J.P. Morgan Securities has asked a federal judge to dismiss the agency's lawsuit against it.
The NCUA Board has failed to prove that the firm made "material misrepresentations'' to the corporate credit unions when selling them residential mortgage backed securities , according to the bank's filing. Instead, J.P. Morgan alleges that the executives of the corporates 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' – backfired when the housing bubble burst. The credit unions lost their 'unreasonable' wager and subsequently collapsed,'' according to the filing.
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