NEW YORK (CNNMoney) -- A federal watchdog for the credit union industry has sued JPMorgan and the Royal Bank of Scotland for allegedly misrepresenting the value of the mortgage-backed securities that they sold in recent years, triggering the failure of five credit unions.
The National Credit Union Administration filed suit in Kansas City federal district court for $800 million against the two financial firms.
The agency, which regulates and charters credit unions, said it expects "to file additional actions and seek a total amount of damages in the billions of dollars."
It has accused JPMorgan (Fortune 500) and the RBS of making "numerous material misrepresentations" of the "questionable securities" they sold to the credit unions for a total of $3 billion.,
In one the lawsuits, the regulator said that many of these securities, which were backed by mortgages, "were all but certain to become delinquent or default shortly after origination. As a result, the [securities] were destined from inception to perform poorly."
Many of these sales occurred in 2006 and 2007. The securities have since been downgraded below investment grade, said the administration, even though more of them were rated triple-A at the time of sale.
JPMorgan and RBS declined to comment to CNN.
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