JP Morgan and Department of Justice Reach Tentative $13B Deal

Oct 19, 2013 5:22pm

The Department of Justice and JP Morgan Chase have reached a tentative deal in their dispute over the bank’s handling of mortgage bonds that would have the financial giant pay $13 billion, according to a source familiar with the negotiations.

The details are still being negotiated, but the tentative deal was finalized Friday night after markets closed in a conference call between Attorney General Eric Holder, Acting Associate Attorney General Tony West, JP Morgan head Jamie Dimon, and JP Morgan General Counsel Stephen Cutler, the source said.

As of a week ago, JP Morgan was offering to pay only $11 billion, and for the past two weeks a “sticking point” has been Dimon’s demand that any agreement over civil matters include a non-prosecution agreement from DOJ, agreeing not to criminally prosecute anyone at JP Morgan for misrepresenting the quality of mortgages to investors.

In a call a week ago, Holder told Dimon that was “a non-starter.”

In the call last night, Dimon indicated that he would give up that demand, the source said. So now, assuming the tentative deal goes through, the criminal investigation continues.

In fact, as part of the tentative deal, JP Morgan has to assist DOJ with obtaining information and evidence related to individuals who allegedly misrepresented the quality of mortgages to investors.

This would be the largest single payment by a U.S. company ever.

In the $13 billion deal, $9 billion is in penalties and fines, with the remainder going to consumer assistance, such as loan modifications, etc.

It will be several more days before a final decision is made. According to the source, the two sides were still haggling over exactly what a “statement of facts” — the document in which JP Morgan admits to certain illegal acts — should say.

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