BayernLB filed a lawsuit in New York State Supreme Court claiming JPMorgan hid the truth about poor quality loans and knew credit ratings on securities misrepresented risk.
BayernLB said: “This misconduct has resulted in astounding rates of default on the loans.”
Most of the securities have been downgraded to junk, it said.
The German lender said it believed the mortgage securities were safe when it invested almost $2.1bn in 57 offerings from 2005 to 2007.
The lawsuit names JPMorgan and other units of the New York-based bank as defendants.
Jennifer Zuccarelli, a spokeswoman for JPMorgan, declined to comment on the lawsuit.
The case is Bayerische Landesbank New York Branch v. Bear Stearns & Co., 653239/2011, New York State Supreme Court, New York County (Manhattan).
