JPMorgan Chase & Co. (NYSE:JPM) To Pay $4.5 Billion To Settle Another Litigation

Posted by Lynn Eisler November 17, 2013 0 Comment 1057 views

Trapped in legal battles with regulators, U.S. agencies and clients, JPMorgan Chase & Co. (NYSE:JPM) recently agreed to resolve claims with 21 institutional investors. The bank will pay $4.5 billion towards resolving claims related to sale of faulty mortgage securities. The investor group is led by the law firm Gibbs & Bruns LLP and includes asset management units of BlackRock, Inc. (NYSE:BLK), Goldman Sachs Group Inc. (NYSE:GS) and Pacific Investment Management Company.

The law firm’s partner handling the case, Kathy D. Patrick said in an e-mail, “We are very pleased that our clients’ steadfast work has again borne fruit, in the form of a binding offer from JPMorgan to pay $4.5 billion in cash and improve mortgage servicing.”

The Agreement

The accord related to initial deal covering around 330 mortgage bond trusts issued between 2005 and 2008 is subject to approval from trustees overlooking those securities and may also be subject to court review, JPMorgan Chase & Co. (NYSE:JPM) mentioned in a statement issued yesterday. The agreement is an addition to the number of litigation expenses already absorbed by the largest U.S. bank.

Last month, the bank agreed to pay approximately $5.1 billion for claims related to lender’s misrepresentation of mortgage bonds sold to Freddie Mac and Fannie Mae. The bank has so far disclosed about eight Department of Justice investigations and more legal disputes are laying ahead, warned JPMorgan Chase & Co. (NYSE:JPM)’s President and Chief Executive Officer, James Dimon.

The said agreement will pay for servicing claims and repurchase demands on mortgage bonds issued by Bear Stearns Co. and JPMorgan Chase. However, it won’t include securities issued by the failed lender Washington Mutual Inc., whose assets were bought by the Bank.

Bank Reserves

JPMorgan Chase & Co. (NYSE:JPM) reported to have sufficient reserves to cover the settlement as well as any remaining mortgage bond litigation.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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