JPMorgan Mortgage Practices Investigation

October 20, 2013 by  

JPMorgan Mortgage Practices Investigation, JPMorgan Chase has reached a tentative agreement with the Justice Department to pay a record $13 billion to resolve allegations that it knowingly sold faulty mortgage securities that contributed to the financial crisis, a person familiar with the talks said Saturday.

The agreement to pay the penalty would cap weeks of heated negotiating and underscore the extent of the bank’s legal woes.

If finalized, the deal would be the largest penalty ever paid by a single company. The agreement would represent a tremendous win for the government after years of public criticism over its struggle to hold Wall Street accountable for its crisis-era misdeeds.

It would also leave JPMorgan and its executives at risk of criminal prosecution, a humbling concession.

The nation’s largest bank emerged from the financial crisis relatively unscathed, but it has struggled to shake off the vestiges of that era. Like many banks, it has been accused of selling bad residential mortgages to investors, including Fannie Mae and Freddie Mac, who lost billions when the housing market crashed.

JPMorgan and the Justice Department have been negotiating a potential deal for months. Talks heated up a few weeks ago and eventually included direct discussions between the bank’s chief executive, Jaime Dimon, and Attorney General Eric Holder.

The deal would resolve an array of state and federal investigations into the bank’s sale of troubled mortgage investments. That type of investment, securities backed by subprime home loans, was at the heart of the financial crisis.

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