In announcing one of the biggest lawsuits to come out of the financial crisis, New York Attorney General (NYAG) Eric Schneiderman made clear Tuesday that investigators are prepared to bring more actions against institutions involved in the mortgage mess.

"There are quite a few investigations underway, and we'll bring cases when they're ready," Schneiderman told reporters after announcing civil charges alleging fraud in how Bear Stearns packaged and sold mortgage-backed securities.

The complaint against JPMorgan Chase, which in May 2008 acquired the dying Bear Stearns with government assistance, is the first action of a nationwide task force of state and federal authorities investigating what led to the mortgage debacle.

Schneiderman, who co-chairs the RMBS Working Group, acknowledged that the statute of limitations for the state securities law cited in the complaint may limit legal options for bringing actions five years after the crisis accelerated. Yet he insisted the task force was not set up to be a one-trick pony.

"There has not been this sort of collective effort by investigators and prosecutors to go after fraud in the mortgage-backed securities market. We have more tools at our disposal. We have a broader range of jurisdiction and more resources than anyone ever has had," he said.

"If you look at the breadth of this complaint — the fact that it's not about one deal or 10 deals or 20 deals but the entire course of business that defendants engaged in — you can see that we were able to bring broader claims. So my expectation is there will be more cases to come involving other institutions, and we'll continue to work with our federal partners to conduct any efficient and effective investigation."

The case focuses on activities in Bear Stearns' securitization platform — run through the company's EMC Mortgage Corp. subsidiary — from 2005 to 2007, when Schneiderman alleges investors were essentially lied to about the quality of loans backing securities, as well as claims that securitizers were adequately monitoring those loans.

"The defendants touted what was called a 'quality control' operation, which was supposed to track loans after they were securitized, and when appropriate require originators to take back defective mortgages," Schneiderman told reporters. "All of these representations were false and misleading, and were designed to conceal fundamental flaws in defendants' due diligence systems. Defendants in fact had no legitimate basis for any of their numerous representations about the quality of loans in their securities, because their systems for ensuring loan quality were a sham."

The case, filed in the New York State Supreme Court, asks for any continuing practices captured in the complaint to end, as well as damages stemming from the alleged fraud. While Schneiderman said the exact amount of requested damages has not been determined, he estimated losses from the misrepresented securities are in the "tens of billions of dollars."

Although the complaint targets JPMorgan Chase, it is focused on Bear Stearns' activities before it was acquired with help in part from a $29 billion Federal Reserve Bank of New York loan.

"The NYAG 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," JPMorgan Chase spokeswoman said in an email. "We're disappointed that the NYAG decided to pursue its civil action without ever offering us an opportunity to rebut the claims and without developing a full record — instead relying on recycled claims already made by private plaintiffs."

Schneiderman said generally the securitizers who created the MBS that helped topple some of the largest institutions were not just middlemen victimized by irresponsible loan originators.

"The picture painted in the complaint indicates that the sponsors … were in fact the driving force behind what's been called the 'securitization machine' that emerged in the middle of the last decade," he said, adding later, "The defendants … provided warehouse lines of credit that enabled the mortgage originators to generate more garbage."

Yet despite the reach of the Bear Stearns litigation, it is still just a civil case, and criminal cases stemming from the crisis still remain elusive.

Part of that may be related to statute of limitations requirements in the Martin Act, the New York law cited in the case, which is five years for criminal cases and six years for civil cases.

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