WASHINGTON - JPMorgan Chief Executive Officer Jamie Dimon met Thursday with Attorney General Eric Holder about an investigation into the company’s handling of mortgage-backed securities in the run-up to the recession.
Holder declined to characterize the discussion, but a government official familiar with ongoing negotiations said an $11 billion national settlement is under review to resolve claims against JPMorgan.
“I did meet with representatives of JPMorgan,” the attorney general said during a news conference being held on another topic.
“We have matters that are under investigation. I expect to be making further announcements in the coming weeks, the coming months,” Holder said. His comment was a general reference to investigations the Justice Department has been carrying out for several years involving some of the nation’s largest financial institutions, including JPMorgan.
Before and after the meeting with Holder, Dimon declined to answer when asked about the discussions.
Other participants in the meeting were Steve Cutler, JPMorgan’s general counsel, and Rodgin Cohen, a partner in the Sullivan & Cromwell law firm. Deputy Attorney General James Cole and Associate Attorney General Tony West also participated.
The Department of Justice is taking the lead on the proposed $11 billion deal, which would include $7 billion in cash and $4 billion in consumer relief, said the government official, who spoke on condition of anonymity because a settlement hasn’t been reached and the official wasn’t authorized to discuss it publicly.
The mortgage-backed securities lost value after a bubble in the housing market burst and helped spur the financial crisis.
In January 2012, a task force of federal and state law enforcement officials was established to pursue wrongdoing with regard to mortgage securities.
In other cases, the Justice Department last month accused Bank of America Corp. of civil fraud in failing to disclose risks and misleading investors in its sale of $850 million in mortgage bonds in 2008. The Securities and Exchange Commission filed a related lawsuit. The government estimates that investors lost more than $100 million on the deal. Bank of America is disputing the allegations.
Last week, JPMorgan agreed to pay $920 million and admitted that it failed to oversee trading that led to a $6 billion loss last year. That combined amount, in settlements with three U.S. regulators and a British one, is one of the largest fines ever levied against a financial institution.
JPMorgan came through the financial crisis in better shape than most of its rivals.
A number of big banks, including JPMorgan, Goldman Sachs and Citigroup, previously have been accused of abuses in sales of securities linked to mortgages in the run-up to the crisis. Together they have paid hundreds of millions of dollars in penalties to settle civil charges brought by the Securities Exchange Commission, which accused them of deceiving investors about the quality of the bonds they sold.
JPMorgan settled SEC charges in June 2011 by agreeing to pay $153.6 million and reached another such agreement for $296.9 million in November.
The talks are still fluid and the size of the settlement keeps changing, according to another person familiar with the matter. The bank is trying to resolve as many investigations as possible before the end of the third quarter on Sept. 30, according to people familiar with the bank’s thinking.
Joe Evangelisti, a spokesman for the New York-based bank, declined to comment on the negotiations.
Information for this article was contributed by Christie Smythe, Dawn Kopecki, Laurie Asseo and Phil Mattingly of Bloomberg News.
Business, Pages 25 on 09/27/2013