WASHINGTON (AP) — JPMorgan Chase & Co. has tentatively agreed to pay $13 billion to settle allegations surrounding the quality of mortgage-backed securities it sold in the run-up to the 2008 financial crisis, a person familiar with the negotiations between the bank and the federal government said Saturday.
If the agreement is finalized it would be the government’s highest-profile enforcement action related to the financial meltdown that plunged the economy into the deepest recession since the Great Depression of the 1930s.READ MORE: Funeral Held For NYPD Det. Jason Rivera, 22-Year-Old Killed In Line Of Duty In Harlem
The person, who spoke on condition of anonymity because the deal has not been finalized, said Attorney General Eric Holder, Associate Attorney General Tony West, J.P. Morgan CEO Jamie Dimon and the bank’s general counsel, Stephen Cutler, negotiated the tentative settlement in a Friday night phone call.
The person said the tentative agreement does not resolve a criminal investigation of the bank’s conduct. It is being handled by federal prosecutors in Sacramento, Calif.
On Friday night, Holder told the bank that a non-prosecution agreement was a non-starter _ meaning that the Justice Department will continue to conduct the criminal investigation of the financial institution, said the person. As part of the deal, the Justice Department expects JPMorgan to cooperate with the continuing criminal probe of the bank’s issuance of mortgage-backed securities between 2005 and 2007, the person said.
JPMorgan spokesman Brian Marchiony and Justice Department spokesman Brian Fallon declined to comment.READ MORE: New Yorkers Bracing For Nor'easter That Could Bring Significant Snow Totals
Of the $13 billion, $9 billion is fines or penalties and $4 billion will go to consumer relief for struggling homeowners, the person said.
When the housing bubble burst in 2007, bundles of mortgages sold as securities soured and the investors who bought them lost billions. In the aftermath, public outrage boiled over that no high-level Wall Street executives had been sent to jail. Some lawmakers and other critics demanded that the big bailed-out banks and senior executives be held accountable.
In response, the government in January 2012 set up a task force of federal and state law enforcement officials to pursue wrongdoing with regard to mortgage securities.
(Copyright 2013 by The Associated Press. All Rights Reserved.)MORE NEWS: TIMELINE: Nor'easter Could Bring More Than A Foot Of Snow To Long Island & Jersey Shore; Up To 8 Inches To NYC
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