The National Credit Union Administration filed lawsuits yesterday in Kansas City, Kansas against accused J.P.Morgan Chase & Co., and the Royal Bank of Scotland Group PLC for duping five credit unions into buying more than $3 billion in mortgage bonds that were "destined to perform poorly" and that quickly sank the credit unions, according to an front-page article in today's edition of The Wall Street Journal by Liz Rappaport and Ruth Simon.

The two lawsuits are "the most aggressive move yet by U. S. regulators to recover losses from Wall Street firms for alleged wrongdoing before and during the financial crisis, the article said, noting that "many of the nation's 7,000 credit unions, which play a critical role in community lending, have been damaged by the mortgage crisis" and "more than 40 have failed since the start of 2009."

NCUA chairperson Debbie Matz told the Journal that "the collapse of the five large institutions, called wholesale credit unions, 'resulted in the worst crisis faced by the credit union industry in its history." The failures have saddle the NCUA with about $50 million in "battered bonds that now are worth just a fraction of their original value" and "some of those losses are being absorbed by other credit unions in the form of higher payments" to the administration's insurance fund, the article said.

The article said that the administration expects to file additional lawsuits against as many as eight more banks and securities firms, according to people familiar with the situation. The association has issued 986 subpoenas to companies involved in the mortgage machine.