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Tags: JPMorgan | settlement | Investors | Mortgage

Investors Weigh JPMorgan's $13B Tentative Settlement Agreement

Monday, 21 October 2013 09:37 AM EDT

JPMorgan's reported $13 billion settlement is huge news for the bank — and its shareholders — but the tentative deal with the government wouldn't resolve an ongoing criminal probe being run by the U.S. Justice Department.

The deal reported over the weekend calls for JPMorgan Chase & Co. to pay $9 billion in penalties and $4 billion for consumer relief for struggling homeowners because of allegations around the quality of mortgage-backed securities it sold before the 2008 financial crisis. The outlines of the tentative deal were reported by The Associated Press and others, based on people who spoke on condition they not be identified by name.

The AP reported that the bank and Justice Department officials negotiated the tentative $13 billion settlement on Friday night. But Attorney General Eric Holder told the bank that a non-prosecution agreement was a non-starter, The AP reported.

The bank has declined to comment.

JPMorgan shares edged up 5 cents at $53.35 in premarket trading 30 minutes ahead of the market opening Monday. Its shares had traded as low as $53.85 earlier.

In September, JPMorgan agreed to pay $920 million and admit that it failed to oversee trading that led to a $6 billion loss last year in its London operation. That combined amount, in settlements with three regulators in the U.S. and one in Britain, is one of the largest fines ever levied against a financial institution. In another case, the company agreed to pay a $100 million penalty and said that its traders acted "recklessly" with the London trades.

In August, the Justice Department accused Bank of America Corp., the second-largest U.S. bank, of civil fraud in failing to disclose risks and misleading investors in its sale of $850 million in mortgage bonds. The Securities and Exchange Commission filed a related lawsuit. The government estimates that investors lost more than $100 million on the deal. Bank of America disputes the allegations.

Growing legal costs from government proceedings pushed JPMorgan to a rare loss in the third quarter. The bank said on Oct. 11 that it set aside $9.2 billion in the third quarter to cover litigation stemming from the financial crisis and its "London Whale" trading debacle. JPMorgan said it has placed a total of $23 billion in reserve to cover potential legal costs.

© Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


StreetTalk
JPMorgan's reported $13 billion settlement is huge news for the bank - and its shareholders - but the tentative deal with the government wouldn't resolve an ongoing criminal probe being run by the U.S. Justice Department.
JPMorgan,settlement,Investors,Mortgage
379
2013-37-21
Monday, 21 October 2013 09:37 AM
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