JPMorgan, Department of Justice Strike Tentative $13B Deal
CAPITALISM, 21 Oct 2013
JPMorgan Chase has reached a tentative $13 billion deal to settle charges with the Justice Department and other regulators over mortgage-backed securities, according to reports.
The Wall Street Journal reported on Saturday [19 Oct 2013] that the terms of the deal, which has yet to be finalized, were reached in a Friday night phone call between Attorney General Eric Holder and the bank’s top lawyer, Stephen Cutler.
The settlement reportedly does not release JPMorgan from criminal liability.
The bank, which is the largest in the nation, has also agreed to cooperate with criminal probes into people involved with the bonds during the height of the housing boom.
The settlement reportedly does not cover criminal probes into ways that the bank, which is the largest in the nation, issued the bonds during the height of the housing boom.
Those securities collapsed when the housing bubble burst, leading up to the financial crisis.
Under the terms of the deal, the bank would pay abut $9 billion in fines and spend another $4 billion to give relief to struggling consumers, according to The New York Times.
The settlement is larger than an anticipated agreement that was expected to include a $7 billion cash fine as well as the money to relieve homeowners.
The deal is larger than the $11 billion anticipated settlement, which was expected to include a $7 billion cash fine and $4 billion in consumer relief.
It would be the largest financial settlement the U.S. has ever reached with a single company.
Reports about the deal emerged shortly after news agencies reported that the bank had reached a $4 billion deal with the Federal Housing Finance Agency (FHFA) over charges that JPMorgan misled Fannie Mae and Freddie Mac about the quality of mortgages it sold them.
FHFA had sued the bank for making false statements about $33 billion worth of mortgage bonds two years ago. Reuters notes that the $4 penalty would amount to a payment of 12 cents on the dollar. That agreement is reportedly a part of the $13 billion settlement.
The bank may also be on the hook for troubled mortgage deals done by two institutions that it took over during the crisis, Washington Mutual and Bear Stearns.
Last month, JPMorgan Chase head Jamie Dimon was spotted at the Justice Department headquarters in Washington on his way to discuss terms of the settlement.
The Wall Street Journal also reported that JPMorgan reached a separate deal with the National Credit Union Administration, though the terms have not yet been revealed.
A Justice Department official could not immediately comment about the settlement.
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