A federal regulator is investigating whether JPMorgan Chase and other financial firms used sophisticated technology to manipulate housing prices and artificially inflate mortgage-backed securities, a move that could jeopardize the future of the nation’s financial system.
The Consumer Financial Protection Bureau said in a statement that it has launched an investigation into whether JPMorgan, Citigroup and Bank of America “used advanced technology to subvert the housing market.”CFPB Director Richard Cordray said in his statement that the regulator has “received numerous reports of mortgage fraud by mortgage companies and other lenders” and that the agency “continues to investigate the extent of the misconduct.”
Cordray said the agency is reviewing hundreds of pages of documents and will release more information as it becomes available.
The investigation comes after JPMorgan’s Chief Executive Officer Jamie Dimon admitted to investigators that his bank had helped mortgage-trading firms manipulate the housing markets.
The bank also admitted to having made false claims about its ability to buy mortgage- backed securities.
JPMorgan also said it had stopped trading in the securities.