JPMorgan Chase told a federal court in Wichita, Kan., that it should reject National Credit Union Administration 's (NCUA) claims regarding $1.4 billion of MBS sold to four failed corporate credit unions and dismiss the suit without even allowing for discovery.

The Wall Street bank rebutted NCUA's claims that a recent court ruling in Massachusetts over similar claims brought by MassMutual Life do not carry over to this case–as NCUA asserted last week. “Unlike here, in MassMutual, the court concluded that plaintiffs had conducted a 'subsequent forensic analysis of the loan data,' finding that it had reviewed information such as assessor, DMV, credit and tax records, and loan servicing and mortgage application data,” argued Chase. “Here, in contrast, the [NCUA] Board did not perform any 'forensic analysis of loan data,' it does not rely upon any original confidential witness testimony and its originator-specific allegations are sorely lacking.”

The filing comes as another federal court in Los Angeles is preparing to dismiss similar charges brought by NCUA against RBS Securities–the main defendant in the MassMutual case–based on the fact that NCUA's claims rely on conclusions based on statistical data showing high failure rates of mortgages packaged into MBS by RBS.

In its suits against Chase and RBS, as well as separate actions naming Goldman Sachs and Wells Fargo's Wachovia Securities unit, NCUA claims the Wall Street underwriters of billions of dollars worth of MBS sold to the corporate failures systematically ignored their own underwriting standards in packaging subprime loans into MBS for sale to U.S. Central Federal Credit Union, WesCorp Federal Credit Union, Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union. The four failures and that of Constitution Corporate Federal Credit Union, are projected to cost the credit union community as much as $20 billion of losses.

But Chase's latest filing casts additional doubt on the NCUA claims, noting the credit union regulator has also attributed the corporate failures in several public pronouncements to market conditions during the mortgage crash. “The [NCUA] Board's own attribution of poor loan performance to market factors reflects that it has not done enough to demonstrate that its systematic disregard allegations are plausible, as opposed to simply possible,” said the Wall Street bank in its pleading.

The NCUA suit involves almost $1.4 billion of residential MBS JPMorgan Chase sold to the four corporate failures between October 2006 and July 2007.

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