Settlement Reached Between JPMorgan And The Justice Department

Settlement Reached Between JPMorgan And The Justice Department

An agreement on the $13 billion settlement is nearly finalized between the Department of Justice and JPMorgan Chase. The settlement is in connection to the mortgage securities issue, and may be announced soon.

Last week, the largest bank in the US agreed to take responsibility for the issues linked to the mortgage securities promoted by the failed bank acquired by the JPMorgan in 2008, Washington Mutual.

Earlier reports indicated that the bank aimed to claim recovery through the Federal Deposit Insurance Corporation. Washington Mutual was taken over by the FDIC, which sold the assets to the bank. However, an affirmative language was successfully acquired by Attorney General Eric Holder that this strategy will not be pursued by the bank.

The deal will result to relief for homeowners worth $4 billion. This includes principle write-downs worth $1.5 billion along with additional relief of $300 million. The deal also includes the $4 billion payment of the bank that was announced by the Federal Housing Finance Agency last month. This includes involves a settlement on the securities laws that the bank violated with respect to mortgages sold to Freddie Mac and Fannie Mae.

No statements were released by the Department of Justice in connection to the discussions with the bank. The agreement set a record for a settlement between the Department of Justice and a single company.

The agreement followed earlier settlements reached by JPMorgan, including another settlement worth $4.5 billion with major institutional investors in connection to mortgage-backed securities purchased prior to the financial crisis.

The settlement included mortgage-backed securities trusts that were issued from 2005 to 2008 by the bank and Bears Stearns. However, it did not include securities that sold by Washington Mutual. Another fine worth over $1 billion was also paid by JPMorgan following its admission over wrongdoings in connection to the “London whale” trading fiasco.

Posted by James Fried on Wednesday November 20 2013, 3:56 AM EST. Ref: USA Today. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0