Credit-Union Regulator Sues J.P. Morgan Over WaMu Mortgage Securities

By Andrew R. Johnson

J.P. Morgan Chase & Co. ( JPM ) was sued again by the National Credit Union Administration over $2.2 billion of mortgage-backed securities sold by Washington Mutual Bank to three credit unions, the NCUA said Friday.

In a lawsuit filed in U.S. District Court in Kansas, the regulator accused Washington Mutual of misrepresenting the quality of mortgages packaged into securities that were purchased by U.S. Central, Western Corporate and Southwest Corporate federal credit unions.

Losses on the investments caused the credit unions to become insolvent, pushing them into convervatorship, the NCUA said.

Washington Mutual was acquired by J.P. Morgan in 2008 during the height of the financial crisis. A spokeswoman for J.P. Morgan declined to comment Friday.

The litigation is the latest in a series of suits the credit-union regulator has filed against banks over faulty mortgage securities. The agency in December sued J.P. Morgan over $3.6 billion in securities sold by Bear Stearns Cos., which also was acquired by J.P. Morgan in 2008.

It also sued the New York bank over its own sales of $1.4 billion in mortgage securities, and has filed suits against Barclays PLC (BCS, BARC.LN), Credit Suisse Group AG (CS, CSGN.VX), Goldman Sachs Group Inc. ( GS ) and other banks.

Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com

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