JPMorgan’s Tentative $13B Deal Said to Hit FDIC Fund Snag
JPMorgan Chase’s tentative agreement to pay a record $13 billion to end civil claims over its sales of mortgage bonds has hit a snag because of the bank’s bid to make the Federal Deposit Insurance Corp. liable for part of the payment, a person familiar with the talks said.
The U.S. Justice Department is opposing JPMorgan’s request that the FDIC assume liability for investors’ losses stemming from Washington Mutual Inc., the person, who sought anonymity to discuss the private negotiations, said today. JPMorgan acquired Washington Mutual’s assets in 2008.
The tentative agreement was described last weekend by two people with knowledge of the situation. It would mark the largest amount paid by a financial firm in a settlement with the U.S. The payment would amount to more than half of JPMorgan’s profit last year. Only seven companies in the Dow Jones Industrial Average earned more than $13 billion in 2012, according to data compiled by Bloomberg.
JPMorgan to pay out $5.1B to GSEs, FHFA
JPMorgan Chase (JPM) will be paying a total of $5.1 billion to resolve outstanding mortgage issues with theFederal Housing Finance Agency and the two government-sponsored enterprises, Fannie Mae andFreddie Mac.
The two agreements were announced Friday afternoon.
As part of the settlements, JPMorgan Chase agreed to pay $2.74 billion to Freddie Mac to resolve outstanding claims over securities sold to the GSEs by JPMorgan Chase, and affiliated firms, Bears Stearns & Co. and Washington Mutual.
In addition, the lender will pay $1.26 billion to Fannie Mae to resolve the same legacy mortgage issues. In total, the bank will be paying out $4 billion to address allegations over securities law violations.
Fannie Mae and Freddie Mac reached separate agreements with JPMorgan Chase to resolve outstanding repurchase claims over toxic mortgages, with the mega bank agreeing to pay $1.1 billion to resolve putback claims from the GSEs.