JP Morgan has reached a $US4.5 billion settlement over mortgage-backed securities the bank sold to investors in the run-up to the financial crisis, the Wall Street Journal’s Julie Steinberg and Dan Fitzpatrick report.
A group of 21 institutional investors had been seeking $US5.75 billion from the bank to settle all claims with JP Morgan (plus Bear Stearns and Washington Mutual, which JPM purchased during the mania of 2008). From the report:
The deal, which could be announced as soon as Friday, does have some complications. It must be signed off on by several trustees overseeing the securities, including Bank of New York Mellon Corp., as well as needing court approval. The offer to the trustees, which were responsible for managing 330 individual mortgage-backed securities trusts, expires Jan. 15 but could be extended for an additional 60 days, said people familiar with the talks.
The pact, agreed to by both sides, would resolve claims on securities issued by J.P. Morgan and Bear but not claims on securities issued by Washington Mutual. J.P. Morgan has since argued in court documents it isn’t on the hook for any mistakes made by Washington Mutual before the Seattle thrift was seized by regulators.
The final cost of the deal could go up if J.P. Morgan were to agree to settle over the Washington Mutual securities.
According to the report, the two parties have discussed terms over the past year and finally agreed to a settlement this week.