The proposed settlement with the New York attorney-general, US attorneys’ offices in California and Pennsylvania and the Department of Justice (DOJ), will enable the US lender to settle all outstanding mortgage-related cases, which are turning into a never-ending legal woe for JP Morgan.
People familiar with the matter were quoted by media sources as saying that the bank offered nearly $3bn, although the DOJ outrightly rejected the proposal, saying that the amount is too low compared to the number of cases involved.
The discussion is an early stage and might not be inked, as there are many issues such as admissions of wrongdoing and sum of fine, among others, on which the concerned parties have not reached an agreement.
It is believed that the admission of liability for miss-selling or wrong doings in RMBs will ignite a number of private litigants.
In August 2013, media sources reported that the US Federal Housing Finance Agency (FHFA) has demanded a $6bn fine from JP Morgan Chase, to settle cases over sale of bad mortgage bonds to government-backed finance companies.
The housing regulators accused the bank for willingly selling the subprime loans packaged into securities to Fannie Mae (FNMA) and Freddie Mac (FMCC), inspite of being aware that the assets were toxic in nature.
Most recently, the lender agreed to pay $920m (£572m) penalty to the US and UK regulators to settle the case pertaining to its failures to supervise and manage ‘London Whale’ trading scandal, which forced the bank to suffer a $6.2bn loss.
The US investment bank is facing a volley of legal cases, which cost nearly $10bn over the last two years and at the end of June 2013, the lender raised its estimate of losses to more than its reserves to $6.8bn compared to $6bn at the end of March 2013.
