JPMorgan Chase & Co. (NYSE:JPM) looks poised to settle another mortgage lawsuit just days after reaching a tentative $13 billion agreement to settle a series of lawsuits and investigations with the U.S. Department of Justice.
In the latest case, a potential $5.75 billion is being sought by a group of more than a dozen bondholders including BlackRock, Inc. (NYSE:BLK), Allianz SE’s Pacific Investment Management Co and Neuberger Berman High Yield Strategies Fd (NYSEMKT:NHS), who all seek to recover losses from mortgage-backed securities sold to them before the financial crisis began.
The deal is separate from the alleged agreement with the DoJ.
This deal comes hot on the heels of another $4 billion deal that JPMorgan agreed with the Federal Housing Finance Agency, Fannie Mae and Freddie Mac’s regulator, that may resolve a 2011 lawsuit that alleges that he bank mislead the housing finance giants over the quality of the securities sold to them during the housing boom which will be drawn from their $13 billion settlement.
The potential multi-billion dollar payouts from the Jamie Dimon-led bank have underlined the sheer magnitude of the decisions made leading up to the financial crisis. The lawsuits, criminal investigations and probes have been piling up for years and it looks doubtful theywill slow anytime soon.
JPMorgan, expectant of more issues, has set aside $23 billion to cover such liabilities this year compared to just $9 billion last year. According to Compass Point Research & Trading LLC, the 11 largest U.S. banks face potential losses of around $30 billion, relating to mortgages and various back claims.
BlackRock and Neuberger Berman made similar claims against Bank of America Corp (NYSE:BAC), which paid out $8.5 billion in 2011.
The Trouble With JPMorgan: BlackRock And Neuberger Berman To Get $5.75 Billion, Similar to Settlement With Bank of America
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