JP Morgan is discussing a record $11 billion fine with US federal and local authorities to settle scandals over risky mortgage-backed securities. This is a $7 billion cash fine and consumer reparations of an additional $4 billion. At issue in the investigations are a number of high-risk home loan-backed securities, which the bank allegedly characterized irregularly.
The negotiations, reported by the Wall Street Journal, are still in their infancy. If a settlement of the hypothesized size were to emerge it would be a recordSo far, the maximum fine imposed on a single company is $3 billion.
Partial agreements are also possible in the case of Jp Morgan, which resolve only a few disputes for a smaller amount, perhaps 3 billion. Some sources have suggested that an agreement could be ready next week.
The legal woes for JP Morgan have multiplied recently. Last week the bank paid $920 million to file the London Whale debacle, aggressive bets on derivatives that caused six billion dollars in hidden losses. In addition to mortgages, investigations are still ongoing and concern manipulation of interest rates and the electricity markets and recruitment practices in China.
Attachments: The Wall Street Journal – JP Morgan Is Discussing $11 Billion Settlement
