J.P. Morgan Chase & Co. is nearing a deal on all civil mortgage-bond-related matters with the Department of Justice, a source told The Washington Post. The amount of the settlement grew from $11 billion to a record $13 billion during Friday night negotiations, but does not yet include a release of potential criminal liability for the bank. The deal will likely require J.P. Morgan to cooperate in criminal investigations of employees tied to corrupt mortgage practices.
"The tentative pact with the Department of Justice increased from an $11 billion proposal last month and would mark the largest amount paid by a financial firm in a settlement with the U.S. The deal wouldn’t release the bank from potential criminal liability, at the insistence of U.S. Attorney General Eric Holder, according to terms described by a person familiar with the talks, who asked not to be named because they were private.
“To not get the waiver from criminal prosecution is not good,” said Nancy Bush, a bank analyst who founded NAB Research LLC in New Jersey. “What we’re looking for in a settlement of this size is certainty from things like the criminal prosecution of a company. The Street wants certainty.”
JPMorgan Chief Executive Officer Jamie Dimon, 57, personally discussed the deal with Holder after markets closed Oct. 18 as the banker sought to end probes that have beset his firm and resulted in its first quarterly loss under his watch. The agreement, which isn’t yet final, includes $4 billion in relief for unspecified consumers and $9 billion in payments and fines, according to another person briefed on the terms.
The payouts would cover a $4 billion accord with the Federal Housing Finance Agency over the bank’s sale of mortgage- backed securities, that person said. The deal, which may be announced next week, also resolves pending inquiries by New York Attorney General Eric Schneiderman, the people said."
JPMorgan’s rising legal and regulatory penalties don’t mean the company’s bankers are “immoral,” Dimon told an audience Oct. 12 at a meeting hosted by Institute of International Finance, where he acknowledged the bank was "working through a series of problems."
“Some are self-inflicted, which we’ve completely confessed to the whole world. Some are obviously industrywide,” he said. “And yes, we’ve had some mistakes. But honestly, you can never expect to have no mistakes. So, we’ve had more than our share.”