JP Morgan looks to settle with US authorities

City A.M. Reporter
JP MORGAN Chase, facing several investigations into its mortgage practices, is seeking a global settlement with US authorities in multiple jurisdictions, a person familiar with the matter said yesterday.

Negotiations have resumed with the US department of justice after federal prosecutors in California delayed a plan to file a lawsuit.

The settlement would cover probes of JP Morgan’s mortgage business, as well as investigations of similar operations it inherited from other banks during the financial crisis.

The California case involved the sale of bonds backed by sub-prime mortgages and other risky home loans between 2005 and 2007.

The California negotiations initially broke down over the amount the bank would pay as a penalty, sources said.

Meanwhile, the department of housing and urban development (HUD) took issue yesterday with a report in another publication that the agency was seeking a $20bn (£12.5bn) settlement from the bank over its mortgage practices. The housing agency said that was “categorically false.”

“No one at this agency – including the secretary – ever floated a $20bn settlement figure,” general counsel Helen Kanovsky said.

The planned California litigation did not involve HUD, and that agency’s involvement in the talks suggest that both the bank and the government want to resolve multiple investigations in a larger settlement, according to people familiar with the matter.

Experts said the new move toward settlement talks appeared to be driven by a strong desire within the bank to move past its legal troubles as quickly as possible, but the Justice Department likely has the upper hand in the talks, given how close it came to filing the suit.