US federal regulators have launched a lawsuit against financial firm JP Morgan Chase & Co over the sale of risky mortgage securities that contributed to the collapse of three credit unions.
The National Credit Union Administration's (NCUA) lawsuit, filed on Friday, alleges that the country's largest bank misled US Central, Western Corporate and Southwest Corporate federal credit unions into buying $2.2b in risky mortgage securities that caused major financial losses.
The three unions became insolvent due to the losses and were placed in NCUA conservatorship, the agency said.
"The damage caused by the actions of firms like Washington Mutual has been extremely expensive to contain and repair," NCUA board chairman Debbie Matz said in a statement announcing the lawsuit.
She added that "it's only right that the people who caused the damage be required to pick up that burden, as well."
The lawsuit adds to a growing list of cases JPMorgan is fighting over conduct tied to the financial crisis, including the conduct of entities it acquired at the height of the crisis.
The NCUA says in the lawsuit, which was filed in federal court in Kansas, that Washington Mutual, acquired by JP Morgan in 2007, misportrayed how risky the securities were and omitted key facts in sales documents.
It was the NCUA's third lawsuit against JP Morgan over losses from mortgage securities
In December, it sued the bank over $3.5b in securities sold by Bear Stearns, which JP Morgan acquired during the financial crisis.
In June 2011, the NCUA sued over $1.4b in securities, in which JP Morgan was the underwriter and seller.
Both suits are still pending.
In the past two years the agency has brought similar actions against Barclays Capital, Credit Suisse, Goldman Sachs, RBS Securities, UBS Securities, Wachovia and others.
Most of the cases are pending, but it has settled claims against Citigroup, Deutsche Bank Securities and HSBC for around $170m.