JPMorgan settlement hits a snag

by Ryan Smith31 Oct 2013

The Justice Department rejected JPMorgan Chase’s proposed terms for a $13bn payout to settle various investigations of the bank’s mortgage bond sales, according to a Bloomberg report.

Citing sources “familiar with the negotiations,” Bloomberg reported that the government opposed JPMorgan’s attempt to avoid criminal prosecution in cases that didn’t involve mortgage-backed securities, and also wanted to prohibit the bank from trying to recover a fraction of its costs from the FDIC. 

JPMorgan claims the FDIC had agreed to cover some of the losses stemming from its liability in the failure of Washington Mutual, which the lender acquired in 2008. The FDIC, however, denies that claim, according to Bloomberg.

The DOJ and JPMorgan agreed to the broad outlines of the $13bn settlement earlier this month. As part of the deal, the bank agreed to pay $4bn to settle claims that it sold shoddy mortgage-backed securities to Fannie Mae and Freddie Mac. JPMorgan still faces investigations into its hiring practices in Asia, its energy-trading practices and financial services it provided for convicted fraudster Bernard Madoff, according to Bloomberg.

 

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