JPMorgan Chase & Co had reached a tentative agreement for the settlement of USD4 billion with the Federal Housing Finance Agency. This would be about the bank's sale of mortgage backed securities, according to an anonymous source familiar with the matter.
The possible settlement with the government agency may be included in a broader seal the bank is trying to leverage with state and federal authorities. The first number required for a deal to be made was at USD6 billion, which was whittled down during negotiations.
JPMorgan cannot reach a global settlement on mortgage backed securities matters but may opt to settlement of individual claims, such as the FHFA claim. The bank has been facing a number of investigations in both the US and abroad, on clims such as a trading loss last year totalling USD6.2 billion as well as its hiring practices in Asia. Since 2010, the bank had used up USD8 billion of a total USD28 billion set aside for legal costs.
The bank had been in discussion for another deal worth USD11 billion with both state and federal regulatory authorities to settle mortgage backed and related claims and inquiries. This includes criminal prosecution in California. The FHFA lawsuit was the most advanced in terms of negotiations, as confirmed by the anonymous source.
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