Earlier in the week, we warned the mortgage settlement that JPMorgan might face could reach $20 billion. Well, 'officials' at the DoJ according to AP have stated that:
- JPMORGAN NATIONAL SETTLEMENT MAY REACH $11B, AP SAYS
- JPMORGAN PACT MAY INCLUDE $7B CASH, $4B CONSUMER RELIEF
What is most surprising is that JPM did not arrange the $11 billion "settlement" as $12 billion in consumer relief and a $1 billion cash payment from the government.
Bear in mind that $7 billion is a huge 36% of JPM's total remaining $19.4 billion in loan loss reserves.
An official familiar with ongoing negotiations among federal and state officials and JPMorgan over mortgage-backed securities says a national settlement for $7 billion in cash and $4 billion in consumer relief is under discussion.
The government official says the Justice Department is taking the lead, though the settlement would include states with claims against the bank. The official spoke Wednesday with The Associated Press on condition of anonymity because a settlement hasn't been reached and the person wasn't authorized to discuss it publicly.
The government has continued investigating JPMorgan over mortgage-backed securities, which banks sold in the run-up to the financial crisis. The securities lost value after a bubble in the housing market burst.