Bear Stearns' Emails Confirm Sale of Sack of Shit Loans

Thanks to Otis and Amy for pointing out this Atlantic article: E-mails Suggest Bear Stearns Cheated Clients Out of Billions. Here's a bit...

Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear. According to e-mails and internal audits, JPMorgan had known about this fraud since the spring of 2008, but hid it from the public eye through legal maneuvering. Last week a lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was unsealed. The lawsuit's supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a "sack of shit." ...more

Teri Buhl wrote the article and went into a little more detail on her personal blog "Wall Street Unplugged" with Bear Stearns Nierenberg Doesn’t Think Cheating Emails are a Big Deal. Here's a bit from Teri's blog...

I’m not sure how JP Morgan will let this case go to trial and not sign a big fat check over to the institutional investors who’ve been suing them for years. According to the unsealed lawsuit one of the Bear traders said in his deposition this summer that ‘shit breather’ was really a ‘term of endearment’ when referring to the toxic bonds. If that’s true then what did they call the financial products they actually liked? ... More

For more information on the Ambac lawsuit, the gang at Zero Hedge posted a thorough overview: JP Morgan Sold Investors MBS Covered By "SACK OF SHIT" Loans... Then Shorted All Those With Exposure: A Goldman-AIG Redux. Here's a whiff of said sack of shit...

JP Morgan, which has so far been able to escape largely unscathed from the fraudclosure scandal, is about to take front and center. The reason: the very first line of the just released Exhibit 1 to the Ambac lawsuit: "In mid-2006, Bear Stearns induced investors to purchase, and Ambac as a financial guarantor to insure, securities that were backed by a pool of mortgage loans that - in the words of the Bear Stearns deal manager - was a "SACK OF SHIT." But the stunner, and nothing short of a full-blown scandal if proven true, is that Bear Stearns (aka JPM) after funneling misrepresented loans with Ambac's insurance, "implemented a trading strategy to profit from Ambac’s potential demise by “shorting” banks with large exposure to Ambac-insured securities." This needs its own congressional hearing right now, followed by a few wristslaps. After all such wholesale fraud can never possibly be prosecuted in the world's most advanced country... More

Last November, Teri Buhl was interviewed by Max Keiser when she was his guest on The Keiser Report. Her segment starts at the 12:40 mark...