Amwal Al Ghad English - 2013-11-20 07:51:28
JPMorgan Chase & Co said it routinely overstated the quality of mortgages it was selling to investors, and it agreed to pay $13 billion to settle related charges with the U.S. government, federal officials said on Tuesday.
The behavior that the largest U.S. bank admitted to, authorities said, is at the heart of what inflated the housing bubble: lenders making bad mortgages and selling them to investors who thought they were safe. When the loans started turning bad, investors lost faith in the banking system, and a housing crisis turned into a financial crisis.
The civil settlement marks the end of weeks of tense negotiations between JPMorgan Chase, which is looking to move past the legal issues that have plagued it for more than a year, and the U.S. government, which is under pressure to hold banks accountable for behavior that led to the financial crisis.
JPMorgan said it has set aside all the funds it needs to cover the settlement, meaning the deal will have no impact on its earnings. The deal resolves most of its mortgage issues with federal authorities, the bank said. JPMorgan's shares rose 0.7 percent to close at $56.15 on Tuesday. More»