JPMorgan Said to Strike $13B Deal with U.S.

JPMorgan Said to Strike $13B Deal with U.S.

10/21/2013 BY: TORY BARRINGER

JPMorgan Chase is reportedly set to pay a record $13 billion to the government to settle questions surrounding its sale of bonds backed by poor loans.

An unidentified source reportedly told Bloomberg that JPMorgan CEO Jamie Dimon discussed the deal on Friday with U.S. Attorney General Eric Holder. According to that source, the discussed deal does not release the bank from potential claims of criminal liability at the insistence of Holder, who earlier this year remarked that some institutions may be “too big to jail.”

The agreement—a step up from the $11 billion deal reported in September—will include $4 billion in relief for

consumers and $9 billion in payments and fines,Bloomberg reported. If finalized, it will be the largest payout in history among settlements between financial firms and the government.

In addition to settling the bank’s dealings with the Federal Housing Finance Agency—which named JPMorgan among more than a dozen defendants who allegedly sold bad loans to Fannie Mae and Freddie Mac—the agreement will also resolve pending inquiries by New York Attorney General Eric Schneiderman, according to reports.

While costly, such a deal will be a long-term victory for JPMorgan, which has been plagued by legal costs following the housing crash. The bank’s third-quarter earnings, released earlier in October, showed a loss as litigation expenses weighed profits down. Many of those issues stem from JPMorgan’s acquisition of Washington Mutual and Bear Stearns in 2008 at the government’s behest—a move Dimon has expressed regret about in the past.

“[The bank’s] Board continues to seek a fair and reasonable settlement with the government on mortgage-related issues—and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, where were undertaken at the request or encouragement of the U.S. Government,” he said in the most recent quarterly filing.

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