N.Y. Attorney General sues JPMorgan for 2008 loan debacle

New York's attorney general is taking on one of the largest financial institutions over its role in the financial crisis.

Eric Schneiderman filed a lawsuit Tuesday against JPMorgan Chase, which purchased Bear Stearns in 2008, contending that Stearns executives didn't evaluate the company's subprime mortgage-backed securities.

The now-defunct company assured its shareholders that the loans were properly vetted, but the attorney general said that was a lie.

As a result of the numerous defaults, Bear Stearns lost $22.5 billion.

"We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble, in order to bring justice for New York's homeowners and investors," Schneiderman said in a statement.

Representatives for JP Morgan Chase didn't return messages for comment.

The lawsuit is the first action taken by the Residential Mortgage-Backed Securities Working Group, a federal-state task force that was created by President Barack Obama to investigate the misconduct that led to the financial crisis.

Schneiderman said Bear Stearns leaders knew many of the borrowers who took out the home mortgages were unable make the payments.

The company's quality control unit failed to find any red flags, the suit said.