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JPMorgan Reaches Record $13-Billion US Settlement

Publication Date: 
October 23, 2013
Global Data Point

Stanford Law Professor Joseph Grundfest is quoted in a Global Data Point article regarding a possible settlement between JPMorgan and the federal government and the role the government played in the "problematic transactions."

JPMORGAN Chase & Co.'s record $13-billion deal to end US probes of its mortgage-bond sales would free the nation's largest bank from mounting civil disputes with the government while leaving a criminal inquiry unresolved. The tentative pact with the Department of Justice increased from an $11-billion proposal last month and would mark the largest amount paid by a financial firm in a settlement with the US.

The deal wouldn't release the bank from potential criminal liability, at the insistence of US Attorney General Eric Holder, according to terms described by a person familiar with the talks, who asked not to be named because they were private. "To not get the waiver from criminal prosecution is not good,' said Nancy Bush, a bank analyst who founded NAB Research Llc. in New Jersey. "What we're looking for in a settlement of this size is certainty from things like the criminal prosecution of a company.


"The settlement probably comes with a sense of chagrin at JPMorgan,' said Joseph Grundfest, a former SEC commissioner who's now a professor of business and law at Stanford University Law School.

"Many of the problematic transactions were done by banks that JPMorgan acquired during the financial crisis at the behest of the US government'"not by JPMorgan itself.' UBS AG, Switzerland's largest bank, agreed to pay $885 million last month to settle claims it misrepresented the quality of the loans backing $4.5 billion in residential mortgage bonds it sponsored and $1.8 billion of third-party mortgage bonds sold to Fannie Mae and Freddie Mac.