It's Official: JPMorgan Owes the Justice Department $13 Billion
Attorney General Eric Holder and the Justice Department announced Tuesday afternoon that a record $13 billion settlement with JPMorgan has been finalized.
Attorney General Eric Holder and the Justice Department announced on Tuesday afternoon that a record $13 billion settlement with JPMorgan has been finalized. At the end of October, it looked like the deal could fall through, but CEO Jamie Dimon apparently came around. Holder said in a statement, “Without a doubt, [JPMorgan's] conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown."
The bank contributed to the 2008 financial crisis by selling residential mortgage-backed securities. The DOJ found that JPMorgan "made serious misrepresentations to the public — including the investing public — about numerous RMBS transactions." At least $4 billion of the bank's settlement will go directly to consumer relief. The rest will settle various lawsuits.
U.S. Attorney for the Eastern District of California Benjamin Wagner explains,
“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis. The impacts were staggering. JPMorgan sold securities knowing that many of the loans backing those certificates were toxic. Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result."
The settlement is good news for the DOJ and bad news for other banks that sold RMBS before 2009. Holder has made it clear he's using the JPMorgan deal as a template to investigate at least nine other banks.