JPMorgan to pay record $13 billion to settle US probes
Banking giant J. P Morgan Chase reached a tentative agreement to pay a record $13 billion fine to the Justice Department to settle probes into its residential mortgage-backed securities, US media reported Saturday.
Copyright Agence France-Presse, 2013
Citing sources familiar with the decision. The Wall Street Journal newspaper reported in its online edition that the deal was hashed out during a phone call Friday with US Attorney General Eric Holder, his deputy Tony West and J. P Morgan's top lawyer Stephen Cutler. If the amount is confirmed, it would be the largest ever paid by a US company in this type of settlement with the government. It's also significantly larger than J. P Morgan's previous offer of $11 billion.
But the still tentative deal wouldn't resolve a criminal investigation into the bank's activities being conducted by a court in Sacramento, California, the Journal said. Both sides still disagree over an admission of wrongdoing that would end the probe. That case could result in charges against individuals, and could increase the fine for J. P Morgan Chase.
The New York Times and the Washington Post, which also reported on the tentative agreement, said that J. P Morgan Chase CEO Jamie Dimon participated in the talks with Holder.
Once finalised, $4 billion would settle allegations by the Federal Housing Finance Agency, a mortgage regulator, that J. P Morgan overstated the quality of the mortgages it sold on to the government-sponsored housing finance enterprises Fannie Mae and Freddie Mac.
Another $4 billion would be destined for consumer relief, and $5 billion would be paid in penalties, the Journal reported.
Although details are still being worked out, the agreement would also resolve a separate lawsuit filed by New York's Attorney General Eric Schneiderman.
US companies tend to avoid paying fines, and often try to make financial settlements without admitting fault. J. P Morgan, the largest US bank by assets, has been under investigation by several US regulatory agencies. It recently agreed to pay more than $1 billion in fines over the "London whale" trading debacle of 2012.
The bank just reported its first quarterly loss in nearly 10 years, a net loss of $380 million on revenues of $23.12 billion, due in large part to a $9.15 billion charge for legal expenses.