JPMorgan Chase slammed with credit union MBS bill

The National Credit Union Administration is threatening to sue several large banks, including JPMorgan Chase, seeking the refund on $50 billion in mortgage-backed securities sold to wholesale credit unions, who buy the securities on behalf of retail credit unions.  The securities are now worth $25 billion, half of what their original value.

In one of the broadest accusations that Wall Street helped cripple financial institutions during the crisis, the National Credit Union Administration, or NCUA, has threatened to sue several investment banks unless they refund over $50 billion of mortgage-backed securities sold to the five institutions, called wholesale credit unions.

The NCUA is accusing Goldman Sachs Group Inc., Bank of America Corp.’s Merrill Lynch unit, Citigroup Inc. and J.P. Morgan Chase & Co. of misrepresenting the risks of the bonds to wholesale credit unions, which loaded up on the bonds in their role of investing on behalf of retail credit unions, according to people familiar with the situation.

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