Attorneys representing the Federal Home Loan Bank (FHLB) of Pittsburgh are reportedly pressuring JPMorgan to disclose the details of its $13 billion settlement with the federal government.
According to Bloomberg News, attorneys for the FHLB of Pittsburgh, which claims losses of more than $1 billion from ‘faulty’ JPMorgan mortgage-backed securities, want a copy of the draft complaint that was filed in federal court in connection with the record settlement, in order to potentially discover admissible evidence that could be used in its own case against the bank.
Attorneys for the FHLB, which is seeking to recoup on losses that aren't covered under the settlement, are particularly interested in learning the identity of a JPMorgan employee who cooperated with the U.S. investigation, according to the report.
In early October, a state court judge reportedly ordered JPMorgan to disclose drafts of the federal complaint to the FHLB of Pittsburgh – however, lawyers for JPMorgan argued against such disclosure at an Oct. 17 hearing, and the bank has since made a motion to dismiss the request.
‘JPMorgan also now attempts to stand in the shoes of the U.S. government and argues that the policy favoring settlements should hide the draft complaint from views,’ David Beehler, an attorney for the Pittsburgh FHLB, wrote in court papers filed Tuesday, Bloomberg News reports. ‘Public policy – the interests of full disclosure and transparency – demands just the opposite of what JPMorgan seeks. The circumstances of this motion lead to one obvious question – what is JPMorgan trying to hide?’
Central to the FHLB of Pittburgh's case is whether the draft complaint will reveal that JPMorgan officials in fact knew that the mortgages the bank was selling to investors on the secondary market were poorly underwritten and thus risky.
‘Given JPMorgan's apparent deep desire to prevent [the draft complaint] from ever seeing the light of day, it would not be at all surprising if [it] is a much more detailed account of JPMorgan's fraudulent conduct, and as such, far more enlightening than the statement of facts,’ the FHLB's filing states, according to the report.