Another Multi-Billion Dollar Settlement – JPMorgan Chase Agrees To Pay $13 Billion
JPMorgan Chase has agreed to pay $13 billion to resolve investigations into its involvement with the subprime mortgage investments which helped trigger the 2008 financial crisis. Of this amount, $9 billion will go towards civil claims brought in federal and state courts while $4 billion will be aimed at helping consumers who were harmed by the improper mortgage conduct of JPMorgan and two of its subsidiaries – Bear Stearns and Washington Mutual. Among the forms this assistance will take is loan forgiveness, loan modifications and efforts to reduce blight. The monies to be paid under the settlement represent more than half of the profit JPMorgan reported in 2012.
As part of the settlement, JPMorgan admitted that it knew that the residential mortgage-backed securities it was selling didn’t comply with underwriting guidelines and shouldn’t have been sold.
U.S. Attorney General Eric Holder stated, “[w]ithout a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown” and that “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.” According to JPMorgan CEO, Jamie Dimon, most of the improper mortgage conduct occurred at Bear Stearns and Washington Mutual.
While this settlement resolves certain civil claims which had been brought against JPMorgan, the company and its officials can still be subject to criminal charges. JPMorgan has denied violating any laws.
