JPMorgan targeted by U.S. task force for role in financial mess NEW YORK - JPMorgan Chase & Co. has become the first target of a Justice Department task force set up this year to hold big Wall Street banks accountable for their role in the financial crisis. In a lawsuit filed in New York State Supreme Court late Monday, New York Atty. Gen. Eric. T. Schneiderman contends that JPMorgan should be held liable for widespread fraud related to the packaging and sale of securities backed by residential mortgages. These mortgage bonds were sold to investors in the run-up to the 2008 financial crisis by Bear Stearns & Co., the crippled investment bank later bought by JPMorgan. The complaint alleges that Bear Stearns acted inappropriately in selling billions of dollars of these securities in 2006 and 2007. The investment bank allegedly misrepresented the quality of the loan pools to investors, who by one count incurred losses of $22.5 billion. The suit does not seek specific monetary damages, rather restitution for investors hurt during the crisis. Bear Stearns "kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans," according to the complaint by Schneiderman. He is co-chairman of the task force launched by President Obama in January to combine the personnel of multiple agencies looking into the mortgage crisis, including the FBI and Securities and Exchange Commission. JPMorgan spokesman Joseph Evangelisti said the bank would contest the allegations, noting that the government lawsuit essentially repeats allegations made in private lawsuits already working their way through the court system. Further, he pointed out that problems at Bear Stearns existed well before its sale at the height of the financial crisis. "We're disappointed that the New York A.G. decided to pursue its civil action without ever offering us an opportunity to rebut the claims and without developing a full record - instead relying on recycled claims already made by private plaintiffs," Evangelisti said. Monday's lawsuit stops well short of what some had hoped would be more aggressive government efforts to hold Wall Street executives and others criminally accountable for their actions. Arthur Wilmarth Jr., a law professor at George Washington University who was a consultant to the Financial Crisis Inquiry Commission, applauded Schneiderman's lawsuit as a "step in the right direction." "There's been a conspicuous lack of federal enforcement against most of the parties involved in the issuance of what turned out to be unsound" mortgage-backed financial products, he said. The lawsuit takes on even more significance considering it comes just days before the first presidential debate. Obama, who has vowed to hold wrongdoers accountable for the crisis, has painted opponent Mitt Romney as a Wall Street insider because of his years running private-equity firm Bain Capital. Future actions of the task force could be the Obama administration's last chance to make Wall Street pay for the financial crisis, given looming statutes of limitations to bring cases. "They are not prosecuting any elites from Wall Street," said William K. Black, a University of Missouri-Kansas City law professor. But they have taken the step of bringing, finally, a civil action. Black, an aggressive regulator of the savings and loan industry after its crisis in the 1980s, said it made sense to file the lawsuit through the New York state attorney general's office because of the Martin Act. That state law makes it easier for the attorney general to prosecute fraud cases without demonstrating that a defendant intended to defraud. Actions by the New York attorney general's office have been seen by some as politically motivated. Previous New York attorneys general - Andrew Cuomo and Eliot Spitzer - went on to become governor of New York. There has been some talk in the state that Schneiderman might have ambitions for higher office, especially at a time that Cuomo might be considering a presidential run in four years. Still, Black gave Schneiderman credit for going after JPMorgan, the nation's biggest bank. "It takes some degree of courage to take them on," Black said. This is not anywhere as big as it could be ... but it is substantial, there is no question about that, in terms of dollars. Tangel reported from New York and Lazo from Los Angeles.