This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

JPMorgan Mortgage Suit Could Fit Bank of America: Street Whispers

NEW YORK ( TheStreet)-- Bank of America (BAC - Get Report) shareholders may feel like they can start breathing easier now that, thanks to a lawsuit unveiled Tuesday by New York Attorney General Eric Schneiderman , the spotlight for mortgage-related bad behavior has shifted for the moment to JPMorgan Chase (JPM - Get Report), but JPMorgan's troubles could end up making matters even worse for the beleaguered bank from Charlotte.

Bank of America is embroiled in litigation with monoline bond insurer MBIA (MBI - Get Report) over shoddy mortgages underwritten by Countrywide Financial, which Bank of America bought in 2008. Among the determinations New York State Supreme Court Justice Eileen Bransten will have to make in the case is whether Bank of America is liable for the actions of Countrywide prior to acquiring the company. She will hear oral arguments on primary liability (Countrywide's) on Nov. 14 and 15 and on successor liability (Bank of America's) on Dec. 5 and 6, according to a report from BTIG analyst Mark Palmer.

In Schneiderman's case, the Attorney General is arguing JPMorgan is liable for the actions of Bear Stearns prior to its acquisition by JPMorgan in 2008.

Palmer argues "Schneiderman's boldness in asserting JPMorgan's successor liability may create an atmosphere in which Bransten may be less likely to let BAC off the hook for Countrywide's actions."

Further, he believes Schneiderman could very well target Bank of America himself.

"Given the role that Countrywide had played in the mortgage market in the run-up to the financial crisis, and the number of mortgage putback-related lawsuits that have been aimed at Bank of America/Countrywide, what are the odds that the bank will be the next target of Schneiderman's group? And that the New York Attorney General would use the successor liability argument he is employing against JPMorgan to target Bank of America," Palmer writes, adding, "we wouldn't want to bet against the likelihood of a headline to that effect leading the business news in the near future."

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.02 -0.81%
JPM $61.11 -0.75%
MBI $7.56 -0.26%
AAPL $93.01 -0.65%
FB $117.92 -0.12%


Chart of I:DJI
DOW 17,641.16 -10.10 -0.06%
S&P 500 2,046.67 -4.45 -0.22%
NASDAQ 4,712.4240 -13.2150 -0.28%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs