JPMorgan Chase agrees $9b pay-out

The largest regulatory settlement in US history has been agreed with federal and state authorities by the JPMorgan Chase bank over misleading mortgage practices that stoked the 2008 financial crisis.

JPMorgan Chase will pay $9bn (£5.6bn, €6.7bn) to authorities and $4bn (£2.5bn,€2.97bn) to consumers, mainly homeowners, harmed by the bank and Bear Stearns and Washington Mutual, two failing businesses it bought during the crisis.

The US Attorney General Eric Holder said after the $13bn deal: “Without a doubt the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown.

“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.”

The New York Attorney General Eric Schneiderman, who co-led an investigation into JPMorgan Chase and other banks over mortgage securities losses suffered by the government and five states, said: “We refused to allow systemic frauds that harmed so many homeowners and investors to simply be forgotten.”

Manhattan-based JPMorgan Chase, the biggest US bank with $2.5tn assets, admitted “serious misrepresentations to the public, including the investing public”.

The settlement includes a $261m damages payment to the California Public Employees’ Retirement System.
Despite the settlement the Justice Department has said that the bank or individual employees could still be charged with criminal offences.

Holder warned: “The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, however profitable, is above the law, and the passage of time is no shield from accountability.”

Separately, JPMorgan Chase agreed in October to pay $5.1bn for misleading the government-backed mortgage banks Fannie Mae and Freddie Mac.

In Spain a former JPMorgan Chase trader now under arrest is fighting extradition to the US, where he faces criminal charges over last year’s “London whale” scandal.

Javier Martin-Artajo is said to have directed other employees to calculate trades and price assets so as to discount losses of $6.2bn in the bank’s London investment office.

Frenchman Bruno Iksil, who was responsible for the trading, was called the London Whale for his prominence in a credit derivatives index. He was cleared of criminal responsibility after co-operating with prosecutors.