The US city of Los Angeles filed a lawsuit on Friday accusing
JPMorgan Chase & Co. of channelling minority borrowers into
risky home loans, according to the Los Angeles Times.
In a lawsuit filed last Friday in the US District Court, the Los
Angeles city attorney alleged the nation's largest bank
"has engaged in a continuous pattern and practice of mortgage
discrimination in Los Angeles since at least 2004 by imposing
different terms or conditions on a discriminatory and legally
prohibited basis", the US paper reported.
Rockwell Olivier's Sydney principal Chris Kintis, who
specialises in commercial dispute resolution, said the case
provides lessons for government authorities in Australia when
examining the conduct of third parties to see if action could be
"I think the larger litigation is well and truly in
Australia and has been for some time now," Mr Kintis said.
"Locally, what we have seen for a number of years is closer
scrutiny of losses and, looking outside of mortgages, I think the
shareholder class actions are examples of close scrutiny of
transactions, comments, statements, and what's not said to the
marketplace," he said.
"The availability of funding is a key driver to those large
claims being prosecuted."
The Los Angeles Times noted that the lawsuit is the latest in a
city attempt to collect unspecified damages based on hits to city
revenue from alleged discriminatory lending.
In a statement, JPMorgan vowed to "vigorously defend"
itself against the city's lawsuit filed on Friday.
"The facts don't support their claims and are
contradicted by our demonstrated commitment to minorities in the
Los Angeles area," JPMorgan spokesperson Jason Lobo said in a
"We are disappointed the LA City Attorney is pursuing an
adversarial approach to address city finances impacted by the
recent economic downturn," Mr Lobo said, adding that the
downturn "was beyond our control".
The JPMorgan suit cites a report from low-income advocacy groups
that claimed the mortgage crisis resulted in 200,000 foreclosures
in Los Angeles from 2008 through to 2012, a wave that depressed
property values, and in turn, city property tax revenue by $481
million, according to the report.
Rockwell Olivier's Mr Kintis said it was unusual for a
government authority to take what almost appears to be
"It will be a complicated argument on losses and
causation," he said.
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Partner Tessa Hoser and Associate Livia Li discuss the lending and secured finance environment in Australia.
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