JP Morgan chief faces the music in person
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Friday 27 September 2013
It was an unusual sight: the boss of America's largest bank travelling to Washington for a face-to-face meeting with the US Attorney General to settle the lender's legal troubles.
The fact that instead of JP Morgan's lawyers, it was the bank's chief executive Jamie Dimon who travelled to the Justice Department underscored the importance of the deal that is widely reported to be in the works – a mammoth $11bn (£6.9bn) settlement to resolve multiple government investigations into the bank's activities.
The talks took an added urgency after indications earlier this week that federal government lawyers in California were getting ready to unveil civil charges against the giant bank, connected to the sale of certain mortgage securities in the run-up to the financial crisis.
With the announcement initially expected on Tuesday, JP Morgan's legal team appears to have to swung into action to strike some kind of deal. The legal headaches have been adding up for the bank, which unlike most of its large counterparts in New York and London emerged bigger and stronger from the financial crisis.
But last year, it was forced to absorb a loss of about $6bn following a series of botched trades, a damaging episode that became known as the London Whale scandal after the market nickname of the trader at the centre of the affair. Just last week, the bank agreed to cough up $920m in penalties to US and UK regulators in connection with the scandal.
The settlement currently said to be in the works could see the bank pay up to $7bn in cash and $4bn in consumer relief to resolve various investigations. Mr Dimon, who is also the bank's chairman, was said to have spent around two hours at the Department of Justice building in Washington for the meeting with the country's top lawyer, Eric Holder.
Mr Holder later declined to give any details beyond indicating that the matter was one to which his team considered a priority.
According to The Wall Street Journal, JP Morgan is pressing for a deal that would ensure it does not face any further legal liability connected to mortgage-backed securities.
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