JPMorgan, Gov’t Reach $13B Deal on Mortgage Bonds
JPMorgan Chase & Co. has agreed to pay $13 billion in a landmark settlement and acknowledged that it misled investors about the quality of risky mortgage-backed securities ahead of the 2008 financial crisis.
The settlement announcement Tuesday with the Department of Justice is the largest ever between the U.S. government and a corporation. It also included settlements with New York, California and other states.
JPMorgan was among the major banks that sold securities that plunged in value when the housing market collapsed in 2006 and 2007. Those losses triggered a financial crisis that pushed the economy into the worst recession since the 1930s.
The deal was reached after months of negotiation and could serve as a template for similar settlements with other big banks. As part of the deal, JPMorgan agreed to provide $4 billion in relief to homeowners affected by the bad loans. The bank also acknowledged that it misrepresented the quality of its securities to investors.
JPMorgan will also pay $2 billion in civil penalties to the federal government and about $1 billion to New York state. Another $6 billion will go toward compensating investors.
This article appeared in print on page 39 of edition of Hamodia.
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