JPMorgan Chase & Co and the Justice Department agreed on a USD13-billion settlement on Tuesday. This marks the end of a long legal battle over questionable mortgage practices. This is the largest amount paid by a company to the government, according to a report published by The New York Times.
The civil settlement resolves a long list of state and federal investigations into JPMorgan's mortgage sale. The bank was reportedly selling troubled mortgage securities to investors from 2005 to 2008. The US government accused the bank of selling the mortgages without full disclosure of its risks. The securities then collapsed in 2008. This helped pull down the economy to its lowest point since the Depression, the report explained.
The government required JPMorgan to pay fines to prosecutor. The bank was also required to provide compensation to struggling homeowners. Moreover, compensation for affected investors was also required. JPMorgan's initial payment was set at USD3 billion but that plan was scrapped, The New York Times reported.
In a statement, Attorney General Eric H. Holder Jr. said of the JPMorgan case: "Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown. JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm's behavior."
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