The criminal investigation of JPMorgan Chase & Co.’s mortgage-backed securities practice is evidence a U.S. Justice Department task force set up to investigate causes of the financial crisis is finally getting some traction against banks blamed for ruining the economy, Bloomberg News reported yesterday. The probe, disclosed this week in the bank’s quarterly filing, is the latest enforcement effort to emerge from the Residential Mortgage Backed Securities Working Group. It was set up last year on orders of President Barack Obama to coordinate prosecutions of fraudulent underwriting activity by banks that contributed to the financial crisis. In February, as the government’s financial fraud task force started what would become a series of financial crisis-related cases, the Justice Department filed a civil suit against Standard & Poor’s, a ratings company, alleging that the firm committed fraud by blessing a series of mortgage-backed securities with top-quality ratings in 2007. Federal and state investigators alleged S&P should have known that the securities were well below investment grade. The government has asked the firm to repay $5 billion in losses.
