JP Morgan agrees to record $13bn settlement with US government

The historic deal is the largest ever struck between authorities in the United States and a single company

After weeks of behind-closed-doors wrangling, JP Morgan Chase, America's biggest bank by assets, acquiesced to a $13 billion settlement with the Justice Department and the state of New York to resolve claims stemming from soured mortgage-backed securities that helped trigger the 2008 financial crisis.

The historic deal is the largest ever struck between authorities in the United States and a single company. The final sum includes $4bn to be released by the bank to assist distressed homeowners, including those still facing foreclosure. That aid will include mortgage modifications such as reductions in principal owed.

That sealing of the deal was announced by the New York Attorney General Eric Schneiderman, who is the co-chair of a group of state and federal officials investigating the mortgage practices of the banks before the crash. JP Morgan was accused of deliberately down-playing the risks associated with the mortgage-backed securities when selling them to institutions such as pension funds.

“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” Mr Schneiderman said. He revealed that New York alone will receive $1.13 from the bank, including $400 million in consumer relief.

It will lift a long lowering cloud from JP Morgan, headed by Jamie Dimon, that was facing claims against itself and two entities that it swallowed up in the wake of the global crash, Bear Stearns and Washington Mutual. However, when the bank entered into the negotiations it was expecting to pay out something closer to $3bn. The civil settlement now done, it still, however, faces criminal proceedings.

The result may also help the Obama administration answer criticism that it has acted too timidly with the Wall Street giants that have long been blamed for engaging in risky, greedy and ultimately illetgal practices that ended up tipping the country into its worst recession since the Great Depression, from which it is still struggling to recover.  The action against J.P Morgan makes clear the slap-of-the-wrist era is over.

“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 firm's behaviour.”

Some critics in both the Democratic and Republican parties as well as consumer groups still fault the government, however, for going after the banks as companies only and not the individual executives who were running at the time in question and in most cases continued to be remunerated to exorbitant degrees.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Recruitment Consultant - IT

£25000 - £30000 per annum + Uncapped Commission: SThree: Sthree are looking fo...

SThree: Trainee Recruitment Consultant - Dublin (based in London)

£20000 - £25000 per annum + commission: SThree: Real Staffing's Pharmaceutical...

SThree: Trainee Recruitment Consultant

£18000 - £25000 per annum + Commission: SThree: Are you great at building rela...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before