US regulators press JPMorgan Chase & Co for at least USD 6 billion to settle lawsuits- source

August 31
10:14 AM 2013

A source told Reuters that the US Federal Housing Finance Agency (FHFA) wanted at least USD 6 billion from JPMorgan Chase & Co for lawsuit settlement. JPMorgan, however, wanted to pay less than the settlement amount prescribed by the FHFA. The person knowledgeable about the matter did not wish to be named as he was not authorized to speak on the matter.

At issue in this case included securities sold by Washington Mutual and Bear Stearns. JPMorgan took over these two banks when the financial crisis hit.

The regulator filed cases against the lender for bonds that were backed by subprime mortgages. The FHFA alleged that JPMorgan misrepresented the thoroughness with which the bank checked the mortgages. The regulator also charged that the mortgages that were sold did not meet the standards set forth by investors. When the borrowers defaulted, investors experienced losses as the value of the securities dropped.

The US government housing authorities also filed lawsuits against sixteen other lenders in connection with the subprime mortgages.

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