(Bloomberg) — JPMorgan Chase & Co. reached a $13 billion deal with the U.S. Justice Department that ends probes into the banks sale of mortgage bonds, the largest amount paid by a financial firm in a settlement with the government.
Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown, Attorney General Eric Holder said in a statement. 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 firms behavior.
The settlement doesnt shield the bank or its employees from criminal liability, according to the Justice Department statement.
As part of the settlement, JPMorgan acknowledged it made serious, material misrepresentations to the public, including the investing public about numerous residential mortgage-backed securities transactions, New York Attorney General Eric Schneiderman said in a statement.
Todays settlement is a major victory in the fight to hold those who caused the financial crisis accountable, he said.
In the settlements statement of facts, JPMorgan acknowledges that it regularly misrepresented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines. JPMorgan made these representations while its employees knew the loans didnt comply with the banks stated guidelines, according to Schneidermans statement.
Energy Trading
JPMorgan still faces probes by the Justice Department that include its energy-trading business, recruiting practices in Asia and its relationship with convicted Ponzi scheme operator Bernard Madoff. Legal bills drove the bank to its first quarterly loss under Chief Executive Officer Jamie Dimon, and he has told investors the clashes probably will continue.
Our preference is always to resolve it, Dimon told investors during a conference call last month to discuss the New York-based banks $380 million third-quarter loss. It is very hard to fight with your regulators or the federal government, but we want them to be fair and reasonable.
