JPMorgan agrees to largest settlement in U.S. history

by Ryan Smith20 Nov 2013

JPMorgan agreed to a landmark payout Tuesday to resolve claims against its sales of mortgage-backed securities. At $13bn, the settlement was the largest with a single entity in American history, but Attorney General Eric Holder said the government’s investigations into financial fraud by big lenders were “far from over.”

The settlement came after investigations into JPMorgan’s financial practices by the U.S. Financial Fraud Task Force’s Residential Mortgage-Backed Securities Working Group.

As part of the settlement deal, the nation’s largest bank was also required to acknowledge that it made “serious misrepresentations” to the public about “numerous” residential mortgage-backed security transactions, according to a statement released by the Justice Department. JPMorgan will also be required to provide relief to underwater homeowners as part of the deal. The settlement doesn’t preclude the possibility that JPMorgan or its employees could face criminal charges.

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Holder said. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability. I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”

“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West. “The conduct JPMorgan has acknowledged -- packaging risky home loans into securities, then selling them without disclosing their low quality to investors -- contributed to the wreckage of the financial crisis.”

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