Banking powerhouse JPMorgan has agreed to the largest regulatory settlement in US history — $13 billion— over mortgage-related practices leading up to the 2008 financial crisis, the US Justice Department announced on Tuesday.

The long-expected settlement resolves federal and state civil claims arising from home loans bundled into investment bonds, or mortgage-backed securities, prior to 2009.

The settlement covers JPMorgan and two failing firms acquired by the largest US bank during the financial crisis, investment bank Bear Stearns and mortgage lender Washington Mutual.

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Attorney General Eric Holder said.

“JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behaviour.”

JPMorgan acknowledged making “serious misrepresentations to the public — including the investing public” about numerous transactions with mortgage-backed securities, according to a government statement.

JPMorgan and individual employees could still face criminal charges, which are not precluded by the civil settlement.

“The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over,” Holder said. “No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.”

Related Topics