JP MORGAN last night confirmed it would pay the biggest ever fine levied on a firm, as part of a $13bn (£8bn) settlement with the Department of Justice (DoJ).
The giant bank is paying up after admitting selling toxic mortgage-backed securities in the boom years, and is accepting responsibility for the actions of Washington Mutual – a collapsed lender it rescued at the government’s bidding in 2008.
Of the $13bn, $4bn will go to the Federal Housing Finance Agency, $2bn to DoJ, and $1.4bn to settle claims by the National Credit Union Administration. Another $4bn will go to customers, a payment which includes some debt forgiveness.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder. “JP Morgan was not the only institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behaviour.”
JP Morgan will pay $9bn in cash, with $4bn of borrower relief, to be delivered before the end of 2017. Chairman Jamie Dimon said the bank was pleased to have found an agreement: “Today’s settlement covers a very significant portion of legacy mortgage-backed securities-related issues.” It is not the end of legal costs for JP Morgan, which was fined $100m over the London Whale derivatives losses and paid investors $4.7bn for mis-sold mortgage portfolios. The bank has set aside $23bn to cover costs for similar cases.