JPMorgan Said to Agree to Details of $13 Billion Accord | North Salem Real Estate
JPMorgan Chase & Co. has resolved the last obstacles to a record $13 billion settlement of civil state and U.S. probes over the sale of mortgage bonds, clearing the way for a deal today after months of negotiations, two people briefed on the matter said.
The accord includes a previously disclosed $4 billion settlement to end a 2011 Federal Housing Finance Agency lawsuit, said one of the people, who asked not to be identified because the discussions are private.
While the deal would mark the largest amount paid by a financial firm in a settlement with the U.S., the Justice Department is still probing JPMorgan’s recruiting practices in Asia, energy trading and its relationship with Ponzi scheme operator Bernard Madoff. The New York-based bank has tapped $8 billion of $28 billion in reserves set aside since 2010 to cover legal costs.
“It’s good they’re getting this done, but it’s a fairly narrow band of cases they are settling,” said Jacob Frenkel, a former Securities and Exchange Commission lawyer who’s now a partner at Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland. “There are still other open investigations that this doesn’t address, and those will run their course.”
JPMorgan agreed to drop litigation against the Federal Deposit Insurance Corp. related to some bonds sold by Washington Mutual Inc., the people said. The bank battled with the FDIC over who should pay some liabilities from the failed Seattle thrift that the agency placed into receivership in 2008 while selling assets to JPMorgan. The deal doesn’t resolve a criminal probe led by the U.S. Attorney’s office in Sacramento, California, into the company’s mortgage-bond sales.
JPMorgan, led by Chief Executive Officer Jamie Dimon, announced a tentative $4.5 billion deal last week with 21 institutional investors, including Pacific Investment Management Co., to settle separate claims that the lender and its subsidiaries sold faulty mortgage bonds. The bank may seek reimbursement from the FDIC for claims against WaMu from those investors, two people familiar with the matter said.
In addition to the U.S. probes, the $13 billion accord will resolve cases with five states, including New York, California and Illinois, one person said, without identifying the other two.
The amount, which increased from an $11 billion proposal in September, represents more than half of JPMorgan’s net income last year. Only seven companies in the Dow Jones Industrial Average earned more than $13 billion in 2012, data compiled by Bloomberg show.
“This would be a huge settlement and there are more to come,” said Michael Bresnick, who was executive director of President Barack Obama’s Financial Fraud Enforcement Task Force until August and is now a partner at Stein Mitchell Muse & Cipollone LLP in Washington. “These cases take time, and you’ve got to put in the time, the energy and the resources and put the work in, and we’re starting to see those results now.”
http://www.bloomberg.com/news/print/2013-11-19/jpmorgan-said-to-agree-to-details-of-13-billion-accord.html
The accord includes a previously disclosed $4 billion settlement to end a 2011 Federal Housing Finance Agency lawsuit, said one of the people, who asked not to be identified because the discussions are private.
While the deal would mark the largest amount paid by a financial firm in a settlement with the U.S., the Justice Department is still probing JPMorgan’s recruiting practices in Asia, energy trading and its relationship with Ponzi scheme operator Bernard Madoff. The New York-based bank has tapped $8 billion of $28 billion in reserves set aside since 2010 to cover legal costs.
“It’s good they’re getting this done, but it’s a fairly narrow band of cases they are settling,” said Jacob Frenkel, a former Securities and Exchange Commission lawyer who’s now a partner at Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland. “There are still other open investigations that this doesn’t address, and those will run their course.”
JPMorgan agreed to drop litigation against the Federal Deposit Insurance Corp. related to some bonds sold by Washington Mutual Inc., the people said. The bank battled with the FDIC over who should pay some liabilities from the failed Seattle thrift that the agency placed into receivership in 2008 while selling assets to JPMorgan. The deal doesn’t resolve a criminal probe led by the U.S. Attorney’s office in Sacramento, California, into the company’s mortgage-bond sales.
Seeking Reimbursement
JPMorgan, led by Chief Executive Officer Jamie Dimon, announced a tentative $4.5 billion deal last week with 21 institutional investors, including Pacific Investment Management Co., to settle separate claims that the lender and its subsidiaries sold faulty mortgage bonds. The bank may seek reimbursement from the FDIC for claims against WaMu from those investors, two people familiar with the matter said.
In addition to the U.S. probes, the $13 billion accord will resolve cases with five states, including New York, California and Illinois, one person said, without identifying the other two.
The amount, which increased from an $11 billion proposal in September, represents more than half of JPMorgan’s net income last year. Only seven companies in the Dow Jones Industrial Average earned more than $13 billion in 2012, data compiled by Bloomberg show.
‘Huge Settlement’
“This would be a huge settlement and there are more to come,” said Michael Bresnick, who was executive director of President Barack Obama’s Financial Fraud Enforcement Task Force until August and is now a partner at Stein Mitchell Muse & Cipollone LLP in Washington. “These cases take time, and you’ve got to put in the time, the energy and the resources and put the work in, and we’re starting to see those results now.”
http://www.bloomberg.com/news/print/2013-11-19/jpmorgan-said-to-agree-to-details-of-13-billion-accord.html
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