Expect More Lawsuits Against Financial Firms: NY AG
The multi-billion dollar fraud lawsuit against JPMorgan Chasefor alleged misconduct at Bear Stearns may be just the beginning in a wave of cases brought against financial firms for their practices before the financial crisis, New York State Attorney General Eric Schneiderman told CNBC’s“Power Lunch” on Tuesday.
“We are by no means singling JPMorgan out,” Schneiderman said. “We expect to bring action against a variety of institutions.”
JPMorgan bought Bear Stearns at the request of the government early on in the financial crisis in March 2008.
This suit was the first to come out of a working group created by President Barack Obama to go after alleged wrongdoing in the financial crisis. (Read More:NY Mortgage Suit Against JPMorgan Could Be Model for Future Cases.)
Sheila Bair, former head of the Federal Deposit Insurance Corp., said in a CNBC interview on Tuesday that she expects more action from this taskforce but would like to see efforts focused on individuals involved in wrongdoing.
"I welcome the enforcement action and I’m glad this taskforce is up and running. But I do wish there was more of an enforcement effort against the individuals who are responsible for this. Take their money and put them in jail when there was fraud involved,” she said.
Schneiderman characterized the alleged fraud at Bear Stearns as “the most flagrant misconduct of any firm in the bundling and sale of mortgage-backed securities.”
JPMorgan said in a statement, "The NY Attorney General civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the U.S. government. This complaint is entirely about historic conduct by that entity."
When asked about why JPMorgan should be targeted since it was buying Bear Stearns at the government’s behest to stave off greater disruption to the financial system, Schneiderman said: “When you buy a firm you get the assets and the liabilities.”