Banking giant JPMorgan has tentatively agreed to pay $13 billion (£8 billion) to settle allegations surrounding the quality of mortgage-backed securities it sold in the run-up to the 2008 financial crisis.
If the agreement is finalised it would be the US government's highest-profile enforcement action related to the financial meltdown that plunged the economy into the deepest recession since the Great Depression of the 1930s.
The source said Attorney General Eric Holder, Associate Attorney General Tony West, JP Morgan chief executive Jamie Dimon and the bank's general counsel, Stephen Cutler, negotiated the tentative settlement in a Friday night phone call.
US bank JP Morgan Chase & Co has reached a tentative $13 billion deal with the Justice Department to settle a range of mortgage issues, a source has told Reuters.
Investment bank JP Morgan has "accepted responsibility" for serious failings over the the 'London Whale' trading scandal that triggered losses of $6.2 billion (£3.9 billion.)
Investment bank JP Morgan's combined £572 million fine today by UK and US regulators over the 'London Whale' trading scandal is the second biggest banking fine, behind HSBC's £1.1 billion money laundering penalty in 2012.
Here is a breakdown of the biggest fines in banking history:
- 1) Bank: HSBC (2012). Fine: £1.1 billion. Reason: Money laundering.
- 2) Bank: JP Morgan (2013). Fine: £572 million. Reason: 'London Whale' trading scandal.
- 3) Bank: UBS (2009). Fine: £485 million. Reason: Tax evasion.
- 4) Bank: Standard Chartered (2012). Fine: £415 million. Reason: Anti-sanctions.
- 5) Bank: ING (2012). Fine: £385 million. Reason: Anti-sanctions.
- 6) Bank: Goldman Sachs (2010). Fine: £359 million. Reason: Misleading investors.
- 7) Bank: Credit Suisse (2009). Fine: £333 million. Reason: Anti-sanctions.
- 8) Bank: ABN Amro (2010). Fine: £311 million. Reason: Anti-sanctions.
- 9) Bank: Barclays (2010). Fine: £280 million. Reason: Libor manipulation.
- 10) Bank: Lloyds Bank (2009). Fine: £218 million. Reason: Anti-sanctions.
Here are the key points in the "London Whale" trading scandal which led to JP Morgan's £572 million fine by UK and US regulators.
- The "London Whale" trading scandal happened last year when JP Morgan traders bet huge sums on complex financial instruments and covered up losses when trades went wrong and problems escalated.
- Trader Bruno Iksil, one of the highest-paid bankers in London at the time, was responsible for losing the bank £1.2 billion through bets of derivative credit default swaps.
- He has agreed to testify against his colleagues and is reported to have been granted immunity by American prosecutors.
- The bank was criticised for its high-risk trading strategy, weak management, a poor response to the problems and failing to co-operate with regulators.
Here are the key points behind JP Morgan's £572 million fine issued by US and UK regulators.
- JP Morgan was handed a £137 million fine by the the UK's Financial Conduct Authority (FCA), the second biggest ever issued by a UK authority.
- The bank was also given a £435 million penalty by three American regulators, including the US Federal Reserve.
- JP Morgan's total fine for "serious failings" over the London Whale trading scandal is £572 million.
The biggest fine happened in December last year when UBS were given a £160 million penalty by the Financial Services Authority (FSA) over libor failings.
In a statement, the FCA's director of enforcement and financial crime, Tracey McDermott, said:
The bank breached four of the FCA’s Principles for Businesses - the fundamental obligations firms have under the banking regulatory system.
The breaches occurred in connection with the $6.2 billion trading losses sustained by CIO in 2012.
The losses were part of the “London Whale” trading scandal and the bank's reportedly high risk "hedging" strategy.