JPMorgan Chase and the U.S. Department of Justice (DOJ) on Tuesday finalized a $13 billion settlement over alleged ‘faulty’ mortgage-backed securities (MBS) the bank sold to investors and pension funds in the lead-up to the financial crisis.
The civil settlement, which comes after months of negotiations, resolves several state and federal investigations into JPMorgan's sale of MBS to investors from 2005 through 2008. It is reportedly the largest settlement ever reached between a financial firm and the U.S. 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 after the final agreement was announced. ‘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.’
A key sticking point in the negotiations was whether the settlement would shield the bank from criminal liability. While the bank and its attorneys had sought to avoid criminal charges, the agreement signed on Tuesday does not protect JPMorgan or its employees from future criminal proceedings.
As per a Bloomberg news report, JPMorgan still faces probes by the DOJ that include its energy-trading business, recruiting practices in Asia and its relationship with convicted Ponzi scheme operator Bernard Madoff.
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